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CVS Caremark (CVS), whose competitors include Rite Aid (RAD) and Walgreen (WAG), was up during the early-afternoon session. At the time of this writing, the shares were higher by $1.34, or 4.4%. At a price of $31.94, they were trading well below the 52-week high of $38.27.The one-year chart is...interesting. I'm not sure an investor could look at it and confidently say with certainty where the stock is heading from here. However, for those who were already considering the company, they can at least be confident that they'd be buying lower instead of higher.
Fundamentally, the drugstore chain has run into a challenging quarter. There was no earnings growth in Q2, according to this article. On an adjusted basis, net income from continuing operations was flat at 65 cents per share. Management cited economic woes as a reason for the lackluster performance. Also, guidance took a hit, including the outlook for same-store sales, which is a key metric in the retail industry.
I would not buy on today's strength. That being said, I continue to believe in CVS Caremark for the long-term. Get this one on pullbacks and hold it as a play on the prescription industry (assuming it passes your own due-diligence tests). The company's trademark has, in my opinion, a lot of value with consumers; such equity should increase over time. As always, execs have to improve non-pharmacy sales, but for the most part, I find this investment idea suitable for the patient player.
Disclosure: I don't own any company mentioned; positions can change without notice.
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