Is Quantum Computing a Real Investment or Just Hype?

SPEAKER_1 (0:01)

This is InvestTalk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

Justin Klein (0:16)

Good afternoon, fellow investors, and welcome back to InvestTalk. This is our Thursday, September 24th, 2026 edition of InvestTalk. I'm Justin Klein, and you are not seeing things. Rates are moving higher in an aggressive fashion, which means a lot of downstream impacts. Remember, treasuries are the risk-free rate, so all of the things are priced off of that number. When that number goes up, well, other asset classes get affected. Maybe not immediately, but in time, that's definitely true. So a lot to unpack during this hour, a lot to talk about. We are here for whatever is on your mind. We're going to be answering your finance and investment questions, and then I'm going to bring you topics, data, and perspective that you can take back to your own personal situation and make better decisions with your money. And speaking of better decisions with your money, I'll remind you of our InvestTalk Retirement Summit. It's our first in-person event in years. I haven't really done many, a lot of webinars since COVID, but we're back. We're excited for this one. It's in Irvine, California, right in our office complex.

It's on October 24th, which means it's one month away. It's today, September 24th.

It'll be a Saturday and you are invited to join us, as well as some guest experts, for this in-person retirement summit. It's free of charge, but seating is very limited. We're already over half full.

So, pre-register by heading over to investtalk.com. Now, in just a bit, I'm going to talk about today's market performance, run down the show topics for the hour. But first, let's tackle this call question now.

SPEAKER_3 (2:08)

Hi, Luke or Justin.

SPEAKER_4 (2:09)

This is Andrew from Buffalo.

SPEAKER_3 (2:11)

I was calling about the stock McKesson Corporation, ticker MCK.

I have a small position to start in there. I was just wondering what you guys thought about the stock and where it's headed. Thanks for the interview. All right.

Justin Klein (2:22)

Looking at McKesson, this is a name that we've owned for clients for some time now. It is, put simply, a fantastic business. They're basically a medical distributor, pharmaceuticals, oncology, medical surgical solutions.

They distribute branded generic, especially in over-the-counter pharmaceuticals. It's just a great business. Return on equity, a return on invested capital is 59 percent.

Free cash flow is 6.1 billion. On $100 billion market cap, $111 billion enterprise value, which means they have about $11 billion in that debt. So solid balance sheet, very little debt. Dividend yield, not amazing. It's about 0.4 percent, but they continue to increase their dividend. They can certainly afford it with that balance sheet. So I expect the dividends to continue to ramp up.

What else are they doing with that?

Cash flow, they continue to buy back shares. If you look 10 years ago, they had 226 million shares outstanding. Now they have 116 million shares outstanding. So they've retired about half their shares in the last decade, which is why revenue growth is supposed to be expected to be 7 percent this year, 7 percent next year. But earnings growth, 16 percent this year, 13 percent next year. And it's trading at kind of a market multiple. You're getting good growth, great business, good balance sheet, secular tailwinds to the industry as a whole. To me, this is one of our strongest convictions. Not exciting, not a sexy name, but certainly a great business.

The near-term is pulling back, not gonna pull back to the 800 level or so from where we're at now around 868 Sure, that's very possible. But medium-term, long-term, we're still very bullish on the name. It was McKesson, MCK is the symbol. You know, the great show yesterday, we looked into the story. Investors borrowed $1.45 trillion to buy stocks. Is record margin debt a warning or just noise? I think that was a very educational segment.

It gave you some context of where we are today compared to history and why it is a bit of a yellow flag right now. We also answered listener questions on McDonald's and many more. If you happen to miss it, go check it out. The best way to get every show is to follow InvestTalk wherever you get your podcasts. I have a lot of ground to cover over the next 45 minutes or so and time permitting we'll get to all of it. Our main focus point today concerns this question. Is quantum computing a real investment or just hype? IonQ shares rallied sharply after coming out to a major quantum computing breakthrough, reigniting investor excitement around the technology that has long been described as transformational, but perpetually years and years away. We cut through that hype and ask, what's the best way to get exposure? If you should try to get exposure at all to the space, it's in your risk level. So we'll dig into that and much, much more, including why high rates could be bad for equities. Dig into that. Then what are investments that you don't need? There's diversification and then there's ways that really don't have any added benefit and can often even shoot you in the foot. So we'll talk about those.