Should You Buy It: AmerisourceBergen

That said, AmerisourceBergen does risk losing some business if CVS Caremark (CVS Quote) is successful in its bid for Longs Drug Stores (LDG Quote). AmerisourceBergen is the primary distributor for Longs (about $2 billion of annual revenue), while competitor CardinalHealth (CAH Quote) is the chief supplier for CVS. The current contract with Longs is only guaranteed through mid-2009, at which point, CVS is expected to renegotiate its existing deal with Cardinal.

In the meantime, it's worth noting that management finds value in the shares, as evidenced by the company's active buyback program. AmerisourceBergen has repurchased $554 million of its own shares in the first three quarters of fiscal 2008, exceeding its budget for the entire year.

I agree with management that the stock offers an attractive value at current levels. AmerisourceBergen has been overlooked by the market, even though the company delivers consistent earnings growth in a volatile environment. Management competes with larger players in the space by keeping its costs low, and I believe the stock can trade back up toward the mid-$40's over the coming quarters.

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