For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"If investors are looking for value in this market, it's hard to pass up the nation's largest drugstore chain -- Walgreen Co. (NYSE: WAG), my favorite more speculative idea for 2008," says Jim Stack, money manager and editor of InvesTech Market Analyst.
"Over the past 10 years, Walgreen's revenue and earnings-per-share have grown steadily at an average annual rate of 15% and 16%, respectively. Moreover, the company has competitive advantages that should help it maintain this enviable growth record.
"In particular the firm is noted for its customer-oriented philosophy and real estate acumen. It is adept at locating freestanding stores on prime corners, with each site required to meet multiple criteria based on traffic flow, demographics and other factors.
"In addition, Walgreen is innovative. The firm pioneered the concepts of a drive-thru pharmacy and keeping selected stores open 24 hours. It was also the first drugstore chain to offer prescription drugs in multiple languages.
"The company's financial position is superb. Walgreen has no long-term debt, and its strong cash flow generation easily covers operating leases and allows a dividend, which has been raised annually for 32 consecutive years.
"In addition to superior profitability, competitive advantage and a strong balance sheet, the stock is attractively priced. Although Walgreen just completed a 33rd consecutive year of record earnings and revenues, fourth quarter profits came in short of expectations, causing the stock price to drop sharply.
"The shortfall was the result of lower reimbursement for generic drugs and poor control of expense growth, which should be quickly addressed. In the interim, in terms of price-to-sales and price-to-cash flow, this premier company is selling at the lowest valuation levels in over 11 years."
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Reader Comments (Page 1 of 1)
12-18-2007 @ 6:17PM
James R. Hildenbrand said...
I could sure use some financial advice from a "trusted and mature firm or a true professional"...I'm a laymen in the financial world and am currently with a large company, with little positive results. I would like to review, but whom do I talk with.
Thanks
Confused
12-26-2007 @ 3:58PM
Larry Grika said...
WAG is the most frustrating stock and disappointing stock I'ver ever had. The profits continually go up, yet stockholders benefit VERY little, since the dividends are less then 1%. In addition, Walgreens stock has dived. I bought it 6 years ago and have lost many $$ (on paper). At the same time I bought Exxon and Boeing. I am so sorry I bought 2000 shares of this listless stock.
Instead I should have bought more of Exxon and Boeing OR OF ANY QUALITY STOCK THAT HAS DONE MUCH BETTER FOR ITS STOCKHOLDERS. The President or CEO or both should resign.
Larry Grika
12-26-2007 @ 8:53PM
JACK said...
I agree with Larry Grika. Not only the president and CEO should resign, but all of the officers of the company. I bought stock in the company when I was employed there as a pharmacist, and also own 200 options (which they refuse to allow me exercise as I no longer work for them.) The value of the stock has dropped about 25% from its high and the options which I have, if I could exercise them, are practically worthless, anyway. The officers make sure their stock and options make them plenty of money, so the stockholders have to bite the bullet.
2-06-2008 @ 2:23PM
Jen said...
Larry, Hang in there. Most stocks are suffering right now. Wallgreens is a great company, I have invested a lot with them and I have faith. I am buying all I can while the price is down.. That is how you win at the stock game! Look at the company. They have NO DEBETS....what companys today can say that. Buy, buy, buy...Stay away from oil, gas and airlines, as soon as they go up a little sell them and put it in Walgreen's stock. You will see after the troops are home and we have a new president a year or two will pass and your Walgree's staock will soar again. Like I said buy it low while you can! God Bless
12-26-2007 @ 10:12PM
minnie said...
WAG waited too long to split the stock again. Investors who are not scared of a little more risk and who want bigger returns and more frequent splits will continue to get seduced by CVS. Indeed wag has been historically very stable...but it is getting quite stale.
1-08-2008 @ 8:40PM
Bearmj said...
Joe Dimaggio of stocks? Try Samy Sosa after he was hit in the head by a pitch in April 2003. He never really recovered.
Walgreens' hit in the head came in Sept 2006.
2-06-2008 @ 2:30PM
Jen said...
Minnie, A split means NOTHING. I hope I can help some of you here. It is just like having $100.00 bill. Then you go to the bank and have them exchange it for 2 $50.00 bills. How does that do anything for you. It doen't. It just makes the stock more afordable to buy. Well, you get to say I have 20 stocks instead of 10. But, it is the same value. Just thought I might help you sound a little better if you are talking to people who know their stuff. Good luck
9-25-2008 @ 8:45AM
P.J. Messineo said...
Wait a minute folks. For long term investors Walgreen is the Joe Dimaggio of the stocks. So, the average was off a bit for one quarter, Wag's consistancy will once again prove it a winner. A big part of the problem is current market VOLATILITY and something has to be done about it. Let's send all the market gamblers packing to Las Vegas, by getting a new fixed 40% tax on short term trades made in 2,3 or 4 days. In essence, all the short term gamblers using the stock market would be working for the government.