Trumpflation Is Pushing Prices Up - These 2 Stocks Could Profit

Unfortunately, it seems like inflation is here to stay at least for now. U.S. consumer prices were 3.4% higher in July than a year earlier, and the Federal Reserve has said tariff increases have pushed up prices for some consumer goods. 

If you're looking to start investing, that backdrop can make choosing stocks feel especially tricky. Higher costs squeeze many companies, but they don't affect every business in the same way. The wrinkle is that certain companies can actually make more money when a supplier raises prices.

Two pharmaceutical distributors, McKesson and Cencora, could fit that description if drug-price inflation persists. The argument centers on contract mechanics that most consumers never see, while the companies' own filings help explain both the opportunity and the limits.

Here's where that thesis gets interesting.

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Why higher drug prices can help distributors

Pharmaceutical distributors generally operate on thin margins, so small changes in pricing can have an outsized effect on profits. McKesson says some of its agreements with drug manufacturers include an inflation-based component that allows it to benefit when manufacturers raise prices and the company sells existing inventory at the new, higher price.

Cencora has similar arrangements, saying certain distribution agreements with brand-name and generic manufacturers include a price-appreciation component. That creates an unusual dynamic: Some drug-price inflation can increase gross profit rather than simply adding another business expense.

McKesson has more than inflation working for it

McKesson's recent results show that higher manufacturer prices aren't necessary for the company to grow. Fiscal first-quarter 2027 revenue increased 8% from a year earlier to $105.4 billion, while adjusted earnings per diluted share rose 20% to $9.93. The company attributed revenue growth to increased prescription volumes and specialty-product distribution, while its Oncology & Multispecialty segment posted 33% revenue growth.

So while the inflation-based provisions in some manufacturer contracts could provide an extra lift when drug prices rise, prescription activity, specialty pharmaceuticals, and oncology give McKesson other potential growth engines.

Cencora has a similar built-in advantage

Cencora's contracts create a comparable opportunity. The company says its gross profit on brand-name and generic pharmaceuticals can fluctuate with the timing and size of manufacturer price increases, which means more frequent or larger increases may work in its favor.

But its latest results also point to volume as an important driver: Fiscal third-quarter 2026 revenue climbed 5.1% to $84.8 billion, while U.S. segment growth came largely from higher unit volume, including specialty products and GLP-1 drugs. In fact, declining manufacturer prices for certain brand-name drugs partially offset that quarter's U.S. revenue growth, which shows how the pricing benefit can move in either direction.

The inflation thesis comes with real risks

Neither company is a pure inflation play, and higher prices don't automatically mean higher profits. Cencora warns that faster generic-drug deflation could hurt its results, while slower price increases on brand-name and generic drugs could reduce the benefits generated by its price-appreciation agreements.

Tariffs aren't necessarily helpful, either, as McKesson warns they could increase sourcing costs, squeeze profit margins, and disrupt supply.

Drug-pricing policy presents another potential headwind: The Trump administration announced nine additional most-favored-nation (MFN) price agreements with pharmaceutical manufacturers in August 2026, bringing the total to 26 manufacturers and expanding efforts to push U.S. drug prices lower.

Bottom line

McKesson and Cencora occupy an unusual spot in an inflationary economy. Certain manufacturer price increases can benefit their distribution economics, but recent results suggest their investment cases depend much more broadly on prescription volume, specialty pharmaceuticals, oncology, and other areas of the drug market.

If you're an investor looking to grow your wealth, it may make more sense to view inflation as a possible tailwind rather than the main reason to own either stock. A company that can still perform if drug inflation fades may offer a more durable investment case than one whose outlook depends on prices continuing to rise.

This article is for informational purposes only and should not be considered investment advice.

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