"Trumpflation" Is Real -- and Getting Worse. Here Are 2 Stocks That Turn Rising Prices Into Rising Profits.
These healthcare companies can actually benefit from inflation.
Recent data reveals consumer prices surged 3.4% in July compared to a year prior, surpassing the Federal Reserve's 2% objective. Energy costs leaped 14.7%, electricity rates climbed 4.2%, and food prices rose 3%. Producer prices were 4.7% higher year-over-year. The Congressional Budget Office attributes the current inflationary pressures to the Trump administration's policies, including trade, tax, spending, and immigration measures that influence prices, demand, and labor supply.
This discussion focuses on how investors can benefit from "Trumpflation" rather than the reasons behind its worsening. While bonds, gold, and energy stocks are common inflation hedge strategies, this piece highlights two stocks that are positioned to gain as prices increase: McKesson (NYSE: MCK) and Cencora (NYSE: COR). McKesson, a pharmaceutical distributor, moves drugs from manufacturers to pharmacies, hospitals, and healthcare providers.
Certain distribution agreements with McKesson contain inflation-based compensation provisions, meaning they can profit when manufacturers raise drug prices, potentially benefiting from higher inventory sales at new, higher prices. McKesson's revenue for the fiscal 2026 year ending March 31 increased 12% year-over-year, reaching $403.4 billion, while adjusted earnings per share grew 18% to $39.11.
Its North American pharmaceutical segment alone generated $336.7 billion in revenue. McKesson's Q2 revenue for fiscal 2027 rose another 8% to $105.4 billion, with adjusted EPS increasing 20% to $9.93. The company has raised its full-year adjusted EPS forecast to $44.20 to $45.00. Cencora also possesses advantages when drug prices rise.
Some of its distribution contracts include price-appreciation provisions, allowing the company to earn extra gross profit when manufacturers increase drug prices. While higher wages, transportation costs, and other expenses may still negatively impact margins, McKesson and Cencora are unique in that they can benefit from certain pharmaceutical price increases, making them interesting investment opportunities amidst inflationary times.
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