"McKesson (NYSE: MCK), our latest stock of the month, should win no matter how the debate on healthcare reform turns out," says Nathan Slaughter.

In his Half-Priced Stocks, he says, "The 175-year old company is the nation's leading generic drug wholesaler; approximately one-third of North America's entire drug supply passes through McKesson's hands."

"Even though it's impossible to know what specific changes are in store once Congress reaches an accord, investors can safely count on three general trends. 

1. 1) You can expect to see continued reliance on generic drugs. These inexpensive alternatives already account for about 70% of all prescriptions nationwide, and a record number of brand-name products are facing patent expiration during the next couple of years.
2.  There will be a massive influx of new patients as we seek to assimilate 47 million uninsured Americans into the system. This will naturally trigger greater demand for everything from flu shots to surgical lasers.
3. The one thing both sides can agree on is that outdated paper medical records need to enter the digital age. In an industry that is rife with inefficiencies, upgrading to electronic systems will cut down on duplicate tests, erroneous lab results and other common administrative snafus that waste as much as $900 million annually. 

"At the confluence of these powerful currents stands a prime beneficiary -- McKesson. The company distributes over $1 billion worth of medicines to Rite Aid, Wal-Mart and thousands of other pharmacies and healthcare providers each week.

"The company supplies more than 300,000 doctors' offices and hospitals with an extensive array of vaccines, medical supplies and surgical equipment.

"It even has products that enable managed care organizations like Aetna and Blue Cross/Blue Shield to communicate with providers and process claims for 160 million plan members.

"If all that weren't enough, the company has an entire division focused on healthcare IT solutions. This suite of software and related services encompasses everything from electronic health records to practice management software to clinical diagnostic and support tools.

"The firm's RelayHealth network, for example, is a connective portal that gives doctors, patients, pharmacies and insurance companies secure online access to shared patient information.

"Among many other uses, this next-generation product can handle e-prescriptions, facilitate online bill paying and support Internet-based consultations with physicians.

"The system already processes more than 12 billion financial and clinical transaction annually. The technology segment only accounts for about one-fifth of McKesson's operating income, but it will be a key growth driver during the next few years.

"Remarkably, just 10% of all hospitals and 20% of physicians' clinics have entered the 21st century and keep medical records electronically. But that is changing rapidly.

"With the staunch support of President Obama, last year's stimulus package included nearly $20 billion in funding to speed up the transition.

"Thanks to incentive payments of up to $5 million for those that comply (and costly Medicare reimbursement penalties for those that don't) penetration rates for healthcare IT could soar to 55% for hospitals and 85% for doctors' offices within the next five years.

"The company is involved at all points of the healthcare spectrum -- from the doctor to the pharmacy to the insurance company.

"Margins tend to be small, but all that volume adds up over time. McKesson may be the biggest company you've never heard of -- it has annual sales of $107 billion.

"Those economies of scale help keep the firm's bottom-line moving briskly forward. In fact, earnings have climbed +65% over the past three years to reach $4.07 per share.

"Yet, even with the shares rebounding to a 52-week high, the stock is still changing hands at just 14 times earnings. A bigger healthcare marketplace, expansion into adjacent markets like biologics, and a surge in technology spending all spell ripe opportunity for McKesson.

"The company has a wide moat, an entrenched customer base, minimal capital expenditures and high returns on capital. And with healthcare reform at hand, the stock should start attracting more attention -- the company stands to benefit regardless of what changes are introduced."