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Has CVS's Pullback Created an Opportunity?

CVS logoThe shares of drug store chain giant CVS Caremark (CVS), first written about here on February 16, 2009, at a price of $27.30, have pulled back slightly after testing $36, but just view that retreat as an opportunity to scoop up shares.

CVS's fundamental story remains strong. Look for 2011 revenue to increase 155 to 18%, aided by more pharmacy benefit clients, and 2% to 3% same-store sales growth.

Continue reading Has CVS's Pullback Created an Opportunity?

CVS Stocks More Food That Could Add More Beef to Our Upside

If we told you that the largest pharmacies chains in the U.S., CVS Caremark (CVS) and Walgreens (WAG), planned to sell more groceries and produce, would you believe us? If so, you would be right. CVS Caremark plans to double the size of its food section and revamp about 20% of its 7,000 stores to better cater to groceries and quick check outs, and Walgreens started to satiate its appetite for the nation's trillion-dollar food budget by announcing last year that it would add up to 500 food items including salads, sandwiches, frozen meats, soups, juices, yogurts and even sushi to its offering.

How Do Consumers Benefit?

Continue reading CVS Stocks More Food That Could Add More Beef to Our Upside

CVS Caremark: Buy After Latest Report?

CVS Caremark (CVS), a drugstore chain that competes with Rite Aid (RAD) and Walgreen (WAG), reported earnings for the fourth quarter on Thursday. The market wasn't taken by them. Looking at the extreme right side of the chart, it can be seen that the stock came under some pressure after the release. This afternoon, the shares are under further pressure: at the time of this writing, they were off by 1.1% to $32.55, with heavy volume backing the trade.

Does it sound like the company missed the estimate attached to it? No, that wasn't the problem. According to the Associated Press, adjusted profit came in at 80 cents per share, one penny ahead of the prediction.

Continue reading CVS Caremark: Buy After Latest Report?

Is CVS Headed Toward $40 and Beyond?

Drug store chain giant CVS Caremark (CVS), first written about here on February 16, 2009 at a price of $27.30, has rebounded smartly from a summer swoon, and has soared through $30 resistance.

CVS's shares formed a bear hug last summer during a walk down from about $38 to $27. Meanwhile, the fundamental story remains strong. Look for 2011 revenue to increase 12-14%, aided by more pharmacy benefits management clients, and 2-3% same store sales growth.

Longer-term, the CVS story remains enviable: a new pharmacy benefits management agreement contract with Aetna (AET) will boost the top line. Further, CVS's position as the largest provider of prescriptions and related health care services in the United States points to an impressive total, average, annual return on equity for shareholders, in the years ahead. CVS's increased use of generics should also aid the bottom line.

Continue reading Is CVS Headed Toward $40 and Beyond?

Closing Bell: Ringing Out the Old Year, Looking Forward to the New (BGP, ZBB, UAM, AFOP, IMAX)

The last trading day of 2010 seems to indicate that traders are committed to maintaining the solid gains of the past year. Volume was light with fewer than 1 billion shares traded by early afternoon. Oil prices pushed back to over $91/barrel, and gold has also risen more than 1%, to around $1,420/ounce. The dollar gained a bit of strength to the euro, but continues its slide against the Japanese yen.

Here are the numbers for late afternoon trading today:

Dow Jones 11,577.51 +7.80 (0.07%)
S&P 500 1,257.64 -0.24 (-0.02%)
Nasdaq 2,652.87 -10.11 (-0.38%)

Continue reading Closing Bell: Ringing Out the Old Year, Looking Forward to the New (BGP, ZBB, UAM, AFOP, IMAX)

Walgreen Near 52-Week High After Q1 Report

Walgreen (WAG) logoWalgreen (WAG) is having a merry Christmas. The stock closed on Thursday at $39.19. The 52-week high for the shares is $40.20. Pretty cool for those who own this name. Something even cooler: the drugstore chain issued a solid fiscal first-quarter report earlier in the week.

The press release begins with three bragging bullet points: the top line gained 6% and came in at $17.3 billion; gross margin expanded by 80 basis points; operating cash flow was $1.2 billion. Nice, but in terms of the latter point, it should be noted that cash from operations was essentially flat compared to last year's number. That's okay, though, it's still respectable.

Continue reading Walgreen Near 52-Week High After Q1 Report

Chasing Value: Pre-Christmas Quick Takes

To paraphrase Mark Twain "The reports of our death are greatly exaggerated". The world economy has been in shambles for a few years now, and our nation has much work ahead of it. 2010 was an improvement over 2009 and I believe 2011 will show further improvement.

There are lots of ideas running through my mind as I consider where the economy might be heading in 2011. What opportunities lay in front of us waiting to be picked up or passed over? Just five trading days left, and market activity will slow down except among fund managers making adjustments for tax purposes or window dressing. You should examine your tax situation, too.

Continue reading Chasing Value: Pre-Christmas Quick Takes

Analyst Calls: CTV, CVX, EAT, FCX, ICE, MAR, MW, TRV, WLP ...

Analyst Upgrades
  • Verisk (VRSK) was upgraded to outperform from market perform at Wells Fargo.
  • Marriott (MAR) was upgraded to outperform from market perform at Bernstein.
  • Jefferies upgraded Teekay (TK) and Tsakos Energy (TNP) to Buy from Hold.
  • Cadence Design (CDNS) was upgraded to sector perform from underperform at RBC Capital.
  • BofA/Merrill upgraded NV Energy (NVE) to buy from underperform and Education Realty Trust (EDR) to neutral from underperform.
  • Men's Wearhouse (MW) was upgraded to buy from hold at Stifel.
  • William Blair upgraded Atheros (ATHR) to outperform from market perform.
  • Freeport McMoran (FCX) was upgraded to buy from hold at Argus.

Continue reading Analyst Calls: CTV, CVX, EAT, FCX, ICE, MAR, MW, TRV, WLP ...

Is Now a Good Time to Scoop Up Shares of CVS?

CVS Caremark logoTo say that the shares of CVS Caremark (CVS), first written about here on February 16, 2009, at a price of $27.30, underperformed this summer would be an understatement.

CVS shares formed a bear hug during a walk-down from about $38 to $27. There, however, the shares appeared to gain equilibrium and have since moved back above $30.

Continue reading Is Now a Good Time to Scoop Up Shares of CVS?

CVS Reaches Pseudoephedrine Settlement

This afternoon, CVS Caremark Corporation (CVS) announced that it reached agreements with the U.S. Drug Enforcement Administration (DEA) and the U.S. Attorneys' Offices for the Central District of California and the District of Nevada that will settle allegations that stores in those areas engaged in unlawful sales of pseudoephedrine (PSE).

Reportedly, some of these sales took place in other states as well. The sales of these products took place in 2007 and 2008. According to a non-prosecution agreement and civil settlement, CVX will pay $75 million in civil penalties and $2.6 million in profit forfeitures. Along with these penalties, the drug store operator will maintain compliance measures and will prevent excessive sales of PSE.

Continue reading CVS Reaches Pseudoephedrine Settlement

Walgreen Up Big on Q4 News

I never would have predicted such a bullish reaction. As I write this, Walgreen (WAG) is up over 12% to $34.04 on the back of an earnings report. With one hour to go before the market closes, volume is huge.

Those of you who bought prior to the report could not have possibly expected this. It represents a big departure from the last time the drugstore posted results. Back in June, shareholders were disappointed with their investment since Wall Street thought the stock should be sold off on the data. It's like night and day this afternoon.

Continue reading Walgreen Up Big on Q4 News

Rite Aid Sold on Q2 News

Rite Aid's (RAD) sell-off Thursday was almost comical. Sometimes you've just got to laugh when a stock that's trading around a dollar suddenly drops over 13%. That's exactly what the drugstore's shares did by the end of the day's regular session. It finished at a quote of 95 cents. And, as you might expect, volume was pretty significant.

Who buys a stock like this? Clearly, someone braver than me. Adding this one to a portfolio is basically no different than playing the slots in Vegas. The one-year chart hasn't changed much since I discussed the company back in June; it still tells a tale of volatility and downward momentum. It's not a ride I'm willing to take.

Continue reading Rite Aid Sold on Q2 News

Thoughts on Market Stories from the Week

Warren BuffettI'm going to offer up brief opinions on some of the events from the past trading week. Maybe you had your eye on one or two of them as well.

Playboy (PLA) reported a net loss in its second quarter. The red ink came out to 16 cents per share this time around; last year, the loss was 26 cents per share. You know what? It doesn't really matter if management was able to narrow the bleeding. Playboy is purely an arbitrage play now, with Hugh Hefner making a bid to take control of the business (a competing bid has been made by FriendFinder, which owns Penthouse). I would avoid making a buy here, since the arbitrage game can be a difficult one to win.

Continue reading Thoughts on Market Stories from the Week

Analyst Calls: ACI, BA, COP, CTXS, CVS, NGS, NVDA, VPRT, WSM ...

Analyst Upgrades

  • BofA/Merrill upgraded ConocoPhillips (COP) to neutral from underperform following the better-than-expected Q2 report. The firm has a $61 price target on shares.
  • Deutsche Bank upgraded Citrix Systems (CTXS) to buy from hold following the company's Q2 results and raised its target for shares to $65 from $45. Shares were also upgraded to neutral from underperform at Cowen following the better-than-expected Q2 report.
  • Macquarie upgraded Arch Coal (ACI) to outperform from underperform and raised its price target to $29 from $23. The firm expects PRB priced to move higher given increased domestic and export demand combined with supply shortfalls.
  • Boeing (BA) was upgraded to hold from sell at Societe Generale.
  • Equinix (EQIX) was upgraded to outperform from perform at Oppenheimer.
  • Williams-Sonoma (WSM) was upgraded to equal weight from underweight at Barclays.

Continue reading Analyst Calls: ACI, BA, COP, CTXS, CVS, NGS, NVDA, VPRT, WSM ...

CVS Caremark Up on Earnings News

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.

Continue reading CVS Caremark Up on Earnings News

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Symbol Lookup
IndexesChangePrice
DJIA+6.5112,890.46
NASDAQ+11.372,927.23
S&P 500+1.991,351.95

Last updated: February 10, 2012: 12:25 AM

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