Reiterating: CVS - Defensive play, extraordinaire

Posted Jul 13th 2009 5:45PM by Joseph Lazzaro
Filed under: CVS Corp (CVS), Stocks to Buy

Do hang onto to those CVS Caremark Corporation (NYSE: CVS) shares, to say the least: I'm Reiterating my Buy rating for the company, first recommended on February 16, 2009 at a price of $27.30.

CVS, a classic defensive, is performing well, despite choppy macroeconomic conditions. Nothing has occurred within the last half-year to suggest that CVS will not be able to successfully incorporate recent acquisitions, and increase sales in key, new growth markets in the U.S.

Hence, as noted, if you're thinking about opening a "Mom & Pop' drug store next to CVS, think again. The First Call FY2009/FY2010 EPS estimates for CVS are $2.60 to $2.99.

Stock Analysis: CVS is a moderate-risk stock. CVS is an investment, not a trade. If you've already purchased CVS's shares, hold them. If not, consider buying a 25% position in CVS now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CVS position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $18.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: cvs, drugstores, pharmaceuticals