I initiated a position in WAG yesterday. As many of you know I really like the company but just haven’t been able to pull the trigger based on valuation. However, that all changed 10 days ago when WAG missed earnings by $0.07 and the stock was hammered 15%. Despite the earnings miss I don’t think that anything has fundamentally changed with WAG and as far as I can tell the pricing environment is the same as it was before the miss. The recent correction has simply made a great company cheaper and I plan on being a very long term shareholder of the company.
For further fundamental information on WAG please refer to the below posts:
From My Blog
Investing Based on Demographics WAG-CVS
From the Money Gardeners Blog:
Who said Drugstore Stocks Were Boring
(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice.)
Showing posts with label WAG. Show all posts
Showing posts with label WAG. Show all posts
Thursday, October 11, 2007
Thursday, September 13, 2007
Investing Based on Demographics - WAG, CVS
Walgreens (WAG)
“Walgreen Co., based in Deerfield, Illinois, filled 529 million prescriptions in fiscal 2006, and pharmacy business accounted for 64.3% of its $47.4 billion in sales. Walgreen also sells over-the-counter medicines which accounted for 11% of sales, as well as general merchandise (which accounted for about 25% of sales), ranging from digital photos to pinto beans. The company's Walgreen's Health Initiatives business manages pharmacy benefit plans for companies and other organizations. As of the end of, August, Walgreen operated 5,992 drugstores in 48 U.S. states and Puerto Rico.”
Dividend Yield: 0.86%
ROE: 19.88%
ROI: 18.68%
PE: 21.6X
Estimated 2007 PE: 21.3X
Estimated 2008 PE: 18.87X
S&P Rating: 5 Stars, Strong Buy, $56 price target
Argus Rating:Buy $53 price target
-paid a dividend for 299 straight quarters
-raised its dividend for 32 consecutive years.
THESIS: the thesis behind this company is obvious: older people take more drugs and fill more prescriptions. WAG should also benefit from seniors buying more beauty items in an effort to keep looking young, as well as more impulse items simply because they’ll be in the store more.
CVS Caremark Corporation (CVS)
“CVS Caremark is the #1 provider of prescriptions and related healthcare services in the nation. The Company fills or manages more than 1 billion prescriptions annually. Through its unmatched breadth of service offerings, CVS Caremark is transforming the delivery of healthcare services in the U.S. The Company is uniquely positioned to effectively manage costs and improve healthcare outcomes through its 6,200 CVS/pharmacy stores; its pharmacy benefit management, mail order and specialty pharmacy division, Caremark Pharmacy Services; its retail-based health clinic subsidiary, MinuteClinic; and its online pharmacy, CVS.com”
Dividend Yield: 0.64%
ROE: 8.95%
ROI: 6.95%
PE: 21.75X
Estimated 2007 PE: 19.78X
Estimated 2008 PE: 16.27X
S&P Rating: 5 Stars, Strong Buy, $46 price target
Argus Rating: Buy, $40 price target
THESIS: is the same as with WAG: older people take more drugs and fill more prescriptions. CVS should also benefit from seniors buying more beauty items in an effort to keep looking young, as well as more impulse items simply because they’ll be in the store more.
“Walgreen Co., based in Deerfield, Illinois, filled 529 million prescriptions in fiscal 2006, and pharmacy business accounted for 64.3% of its $47.4 billion in sales. Walgreen also sells over-the-counter medicines which accounted for 11% of sales, as well as general merchandise (which accounted for about 25% of sales), ranging from digital photos to pinto beans. The company's Walgreen's Health Initiatives business manages pharmacy benefit plans for companies and other organizations. As of the end of, August, Walgreen operated 5,992 drugstores in 48 U.S. states and Puerto Rico.”
Dividend Yield: 0.86%
ROE: 19.88%
ROI: 18.68%
PE: 21.6X
Estimated 2007 PE: 21.3X
Estimated 2008 PE: 18.87X
S&P Rating: 5 Stars, Strong Buy, $56 price target
Argus Rating:Buy $53 price target
-paid a dividend for 299 straight quarters
-raised its dividend for 32 consecutive years.
THESIS: the thesis behind this company is obvious: older people take more drugs and fill more prescriptions. WAG should also benefit from seniors buying more beauty items in an effort to keep looking young, as well as more impulse items simply because they’ll be in the store more.
CVS Caremark Corporation (CVS)
“CVS Caremark is the #1 provider of prescriptions and related healthcare services in the nation. The Company fills or manages more than 1 billion prescriptions annually. Through its unmatched breadth of service offerings, CVS Caremark is transforming the delivery of healthcare services in the U.S. The Company is uniquely positioned to effectively manage costs and improve healthcare outcomes through its 6,200 CVS/pharmacy stores; its pharmacy benefit management, mail order and specialty pharmacy division, Caremark Pharmacy Services; its retail-based health clinic subsidiary, MinuteClinic; and its online pharmacy, CVS.com”
Dividend Yield: 0.64%
ROE: 8.95%
ROI: 6.95%
PE: 21.75X
Estimated 2007 PE: 19.78X
Estimated 2008 PE: 16.27X
S&P Rating: 5 Stars, Strong Buy, $46 price target
Argus Rating: Buy, $40 price target
THESIS: is the same as with WAG: older people take more drugs and fill more prescriptions. CVS should also benefit from seniors buying more beauty items in an effort to keep looking young, as well as more impulse items simply because they’ll be in the store more.
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