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You can count on spring following winter, and you can count on drug store chain extraordinaire CVS Caremark Corporation (CVS) growing sales. Look for CVS, first written about here on February 16, 2009 at a price of $27.30 to post same store sales growth of 4-6% in 2010.
Meanwhile, store square footage should increase by about 2.0%, with front store margins widening slightly. Further, 6900-store CVS, extremely adept at store placement, should also do reasonably well incorporating recent drugstore acquisitions. The verdict is not in yet, however, regarding company's in-store health clinics.
The First Call FY2010/FY2011 EPS estimates for CVS are $2.80 to $3.11. Each EPS estimate looks about 5% low, according to my analysis.
Technically, after a gap-down plunge below the key, 50-day moving average in November 2009, CVS recovered and is now back above the average, trading near $34, and there is scope to $45. CVS will encounter psychological resistance at $40, but this should prove to be minor.
2010 Outlook: I view CVS as a long-term play, but if investors are looking to sell CVS within the year, I wouldn't purchase the shares, as the 1-year risk/return is not favorable.
Stock Analysis: I consider CVS Caremark Corporation to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. Under any circumstance, I wouldn't buy more than 75% of my CVS position before April 2010 and I'd put a sell/stop loss at: $18.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The First Call FY2010/FY2011 EPS estimates for CVS are $2.80 to $3.11. Each EPS estimate looks about 5% low, according to my analysis.
Technically, after a gap-down plunge below the key, 50-day moving average in November 2009, CVS recovered and is now back above the average, trading near $34, and there is scope to $45. CVS will encounter psychological resistance at $40, but this should prove to be minor.
2010 Outlook: I view CVS as a long-term play, but if investors are looking to sell CVS within the year, I wouldn't purchase the shares, as the 1-year risk/return is not favorable.
Stock Analysis: I consider CVS Caremark Corporation to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. Under any circumstance, I wouldn't buy more than 75% of my CVS position before April 2010 and I'd put a sell/stop loss at: $18.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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