Should You Buy It: AmerisourceBergen

AmerisourceBergen (ABC Quote) is often overlooked as the middle-man in the pharmaceutical industry. The company is one of the largest drug wholesalers in North America, which is a business that carries razor- thin gross margins of only 4%. But what Amerisource lacks in profitability, it makes up for in volume, posting north of $66 billion of revenue last year.

The stock was upgraded Wednesday from Neutral to Buy at Merrill Lynch. The analyst cited the company's low valuation and solid price increases in branded drug pricing for the call. Still, Wall Street has a relatively cool outlook for the shares, with just four out of 13 analysts surveyed by Bloomberg rating AmerisourceBergen a Buy.

At Wednesday's closing price of $38.53, the stock is trading at 12 times expected fiscal 2009 (ending September) earnings of $3.21 This represents a 28% discount to the company's historical average valuation over the past decade, and marks the lowest multiple the stock has received in three years. With that in mind, I'm here to answer readers' questions: Should you buy it? Does AmerisourceBergen have the cure for investors' woes in this volatile environment?

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