CVS has used acquisition (1,100 Eckerd drugs stores acquired in 2004, 700 Albertson's drugs stores acquired in 2006) and a super-rigorous, systematic store opening plan to create the drug store world's equivalent of a lien, mean, fighting machine: more than 6,200 stores in 43 states.
CVS has the resources, economies of scale, and, arguably, most importantly, the store site selection experience to continue to drive impressive revenue/EPS gains. Further, recent improvements in inventory processes and cost management support the above, and the acquisition of Caremark should add new clients/customers. True, back-store (pharmacy) margins may be pressured by generic competitors, but the front-store (everything else) should make up for it in 2007-2009. CVS's shares closed Tuesday up 39 cents to $40.11.
Time was that grade-school children used to walk to their neighborhood drug store and pick up a needed household item for the parent at home. [In fact, one grade-schooler - - whom the Editor knows very well - - would frequently manage to buy with a portion of his allowance a pack of baseball cards and candy or an ice cream cone during these frequent errands.] In quaint U.S. villages and some small towns, those neighborhood drug stores still exist, few though they may be.
In every other community CVS dominates or is a leading brand, particularly in car-oriented suburban areas. Which is why if you're thinking about starting your own business, you may want to pass on that idea, if it is a line of general-consumer drug stores.
[Note: Technical analysis agnostics stop reading here; all others continue.]
Technically, CVS's chart looks strong. The stock, save only a minor breach this summer, has been above its 50-day moving average for about seven months. The stock did encounter typical 00 resistance at $40 and its p/e at 23 is not low, but assuming it can close consistently above $40 in the weeks ahead, the chart looks poised for further impressive advances.
Stock Analysis: CVS (CVS) is a low-risk stock, and the company's prospects for continued success are bright. Investors seeking a drugs / consumer products defensive play should consider purchasing CVS's shares.
In every other community CVS dominates or is a leading brand, particularly in car-oriented suburban areas. Which is why if you're thinking about starting your own business, you may want to pass on that idea, if it is a line of general-consumer drug stores.
[Note: Technical analysis agnostics stop reading here; all others continue.]
Technically, CVS's chart looks strong. The stock, save only a minor breach this summer, has been above its 50-day moving average for about seven months. The stock did encounter typical 00 resistance at $40 and its p/e at 23 is not low, but assuming it can close consistently above $40 in the weeks ahead, the chart looks poised for further impressive advances.
Stock Analysis: CVS (CVS) is a low-risk stock, and the company's prospects for continued success are bright. Investors seeking a drugs / consumer products defensive play should consider purchasing CVS's shares.
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