Walgreen (NYSE: WAG), a drugstore chain which competes with CVS Caremark (NYSE: CVS) and Rite Aid (NYSE: RAD), dropped the ball in the fourth quarter, at least as far as analyst estimates are concerned. On a GAAP basis, Walgreen increased its earnings per share by a nickel, coming in at 45 cents.

That would be pretty cool if there were no adjustments to be made. Unfortunately, there is one. It relates to an adjustment for vacation-time accrual, which added almost $80 million to the bottom line. Take that away, and you get no earnings growth, as earnings per share would have been 40 cents, meaning non-GAAP number missed expectations by 5 cents.

I think Walgreen is a strong brand in its space. However, with the economic meltdown continuing its dire course, I would imagine that the chain is going to become affected by it, strong brand or not. Drug prescriptions certainly might be considered a defensive element in such an environment, but keep in mind that Walgreen doesn't just make its money on prescription sales. It sells a whole host of items in every location. And I'd have to imagine that the consumer is going to be scaling back. Yep, get ready for the good ole negative wealth effect.

Rite Aid (NYSE: RAD), a drugstore brand that competes with Walgreen (NYSE: WAG) and CVS Caremark (NYSE: CVS), reported results for the second quarter on Thursday. Unfortunately, they did not meet the expectations of analysts. Revenues were basically flat at $6.5 billion. The net loss more than doubled to $0.27 per diluted share, compared to $0.10 per diluted share one year ago. According to this item, Wall Street was hoping that Rite Aid might be able to deliver a loss of $0.15 per diluted share. Furthermore, that news source states that guidance for the fiscal year is worse than the consensus. The consensus believed that Rite Aid might bleed about $0.51 per share in red ink. The loss will at least be $0.56 per share, according to management. It might even go as high as $0.67.

So, I just gave out all the nasty stuff. Is there anything encouraging from the release? Let me put on my look-on-the-bright-side glasses. Net cash from operations was positive during the quarter. Over $96 million was generated. Last year, operations required almost $140 million. I dig cash, no doubt about it. But I really love free cash flow. If you add back sale-leaseback transactions, there was some free cash, but I can't say it changes my general stance on Rite Aid. I mean, overall same-store sales are weak, and the stock is currently priced at less than a buck. It's done horribly year-to-date according to the AOL Finance snapshot taken at the time of this writing. Down 67%. Not encouraging.

Rite Aid's shares aren't so much stock certificates as they are lottery tickets. Do you like playing the lottery? If so, go buy one of those scratch-off deals. You might have better luck with them than you would with Rite Aid.

Disclosure: I don't own any company mentioned; positions can change at any time.

Last year, actually 18 months ago now, James Cramer had enough faith in the Rite Aid Corp (NYSE: RAD) to include it in his 2007 picks. At that time the stock was trading for $5.49 per share. It closed yesterday at $1.56 and is trading further down today.

When I say RAD is wrong, wrong, wrong, I mean it literally. There is a store located a few blocks from my office that I shop at perhaps once a month. Yesterday I bought a few things and was amazed at how bad their accounting was.

My primary mission was to acquire some toothpaste, but there are always a few tempting sale items. When I was checking out I discovered that the sports drink for sale at "5 for $5 dollars" was a mistake and the sign in the store display should have been taken down because the offer had expired. Another item I purchased was marked down from $3.99 to $1.99, great deal! . . . but they told me that the sale price was placed on the wrong shelf for that product and what I wanted was not on sale.

CVS Caremark (NYSE: CVS), a big competitor of both Walgreen (NYSE: WAG) and Rite Aid (NYSE: RAD), released its Q1 earnings last week. They were very good, and they reminded me that I probably need to throw a drugstore chain's stock in my core portfolio as a long-term play on the increasing health-care needs of the baby boomers (and every other demo, for that matter).

Looking through the reported growth rates, you can see that we're talking best-of-breed here. Revenues were up over 60%, and adjusted earnings per share increased over 18%, coming in at $0.55. The Caremark merger has obviously proven to be a good move. Same-store sales rose 3.9%, benefited in part by the early appearance of Easter in March.

According to earnings.com, CVS Caremark basically matched earnings expectations. That's okay, though, I don't think you can hold it against this big brand name. As of this writing, CVS is near a 52-week high. Buying at the 52-week high is always a dicey thing, but if you plan on holding for years, it wouldn't be that much of a concern. Shorter-term traders would need to wait for a pullback. But I like the first quarter results for CVS, and I think the stock is poised to do well over time. And like I said at the beginning, this really may be a stock for the core portion of an individual's investment program -- a true buy-and-hold idea.

Disclosure: I don't own shares in any company mentioned here; positions can change at any time.

Shares of nation's third-largest Rite Aid Corp. (NYSE: RAD) have been plunging over 8% in early trading after the company announced this morning it swung to a fourth quarter loss. The slump also came after the retailer issued a disappointing 2009 fiscal year guidance.

Rite Aid posted a loss of $960.4 million, or $1.20 a share, compared with a profit of $7.1 million, or a penny a share, in the same period a year ago. The company's quarterly numbers were hurt by a income tax charge and other costs connected to its acquisition of more than 1,800 stores last year.

Included in the company's earnings numbers were $894.9 million related to a non-cash income tax charge. Excluding that, Rite Aid's quarterly loss would have come at $65.5 million, or 8 cents a share. Analysts' forecast (which typically exclude one time items) was for a loss of 7 cents a share in the quarter, according to Thomson Financial.

Rite Aid (NYSE: RAD), I should disclose, is one of my least favorite companies and stocks. Nevertheless, I don't mind checking in on it from time to time when there is news about it. Yesterday, the pharmacy released sales data for the month of March (the data excludes the Brooks Eckerd acquisition). Did they change my outlook on Rite Aid at all?

No, although I should say that this wouldn't be necessarily expected; a month of same-store sales data isn't the killer app of an overall investment thesis for a retail idea. Still, shareholders follow comps religiously, and I have to say that Rite Aid's number was nothing to write home about. A 2.6% gain in sales at stores open more than a year is weak. Walgreen (NYSE: WAG) said earlier in the week that its comparable-store revenues grew by a much better 4.4%. Walgreen was able to take advantage of the Easter shopping excitement in a much better fashion than Rite Aid. It all comes down to brand and execution; Walgreen, as well as CVS Caremark (NYSE: CVS), are more valuable in terms of both those attributes.

I may not have been bowled over by Walgreen's recent earnings release, but I can tell you that Rite Aid's share price is downright frightening and telling -- it's telling people to stay away, or at least understand that it may be essentially like buying a lottery ticket (it closed at $2.89 yesterday). Rite Aid's same-store sales were weak, and so is its investment potential.

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

Walgreen Company (NYSE: WAG) reported earnings for the second quarter on Monday. Net sales grew by a very decent 10%. Diluted earnings per share for the quarter were $0.69 versus $0.65 in the year-ago period; this represents a bottom-line gain of 6%.

Considering some of the other action on Wall Street on Monday -- the increased offer for Bear Stearns, the approval of the Sirius/XM merger -- Walgreen's earnings report was simply an okay event, even though the stock closed up around 5% on the news. Same-store sales may have increased 4.7%, but the retailer sold a lot of items with lower margins this time around, thus reducing its gross-margin metric by 14 basis points (the release did cite a big shift to pharmacy sales in the quarter as having negatively impacted margins). So Walgreen needs to work on its non-pharmacy revenues. One cool thing from the report is the jump in net cash from operations -- that number increased by 10%.

Walgreen, which competes with CVS Caremark Corporation (NYSE: CVS) and Rite Aid Corporation (NYSE: RAD), isn't a bad way to play the long-term drug-retailing business. To be sure, baby boomers -- as well as everyone else -- will always need to visit drugstores on a go-forward basis. It's the company that can capture a significant amount of non-pharmacy sales that will prosper the most. Walgreen and CVS are excellent brand names in this sector -- I'm not so keen on Rite Aid, though (take a look at the stock price and see if you think the company might be cheap-for-a-reason, as they say).

Disclosure: I don't own any shares in any of the companies mentioned here; positions can change at any time.

MOST NOTEWORTHY: Teradyne, Omnivision and DemandTec were today's noteworthy upgrades:

• Oppenheimer upgraded shares of Teradyne Inc (NYSE: TER) to Outperform from Perform after channel checks indicated several positive catalysts, including continued market share gains and that the company is benefiting from the inventory build of game consoles.
  
• Jefferies upgraded Omnivision Technologies (NASDAQ: OVTI) to Buy from Hold and named the stock their Tuesday Value Pick, as they find the risk/reward favorable at current levels. Jefferies thinks fundamentals will likely bottom in the April quarter.
• JMP Securities raised DemandTec Inc (NASDAQ: DMAN) to Strong Buy from Outperform, as they believe the company had a very strong close to the year and is seeing real traction with its Promotions product.

OTHER UPGRADES:

• MasterCard Incorporated (NYSE: MA) was raised to Neutral from Outperform at Credit Suisse.
  
• JP Morgan upgraded Rite Aid Corporation (NYSE: RAD) and Campbell Soup Company (NYSE: CPB) to Overweight from Neutral.
  
• Bear raised Repsol SA (NYSE: REP) to Outperform from Peer Perform.

MOST NOTEWORTHY: Sanofi-Aventis, Lifecell, Mylan Labs, Panera Bread and Norsk Hydro were today's noteworthy upgrades:

• Societe Generale upgraded shares of Sanofi-Aventis (NYSE: SNY) to Buy from Hold as they believe pipeline maturation over the next 12 months can drive the stock higher.
  
• Piper upgraded shares of Lifecell (NASDAQ: LIFC) to Outperform from Market Perform after their recent survey indicated that AlloDerm remains the leading biologic hernia mesh on the market and competition is making little headway.
  
• JP Morgan upgraded Mylan Labs (NYSE: MYL), Panera Bread (NASDAQ: PNRA) and Norsk Hydro (NYSE: NHY) to Overweight from Neutral. The firm upgraded Mylan based on its position in the global generics market and above-average growth; Panera was upgraded on valuation, as they believe the recent operating risk is now behind the company; Norsk Hydro was upgraded, as they believe the value of the company's aluminum assets are higher than the current share price suggests.

OTHER UPGRADES:

• HSBC upgraded Ride Aid (NYSE: RAD) to Neutral from Underweight.
  
• UBS upgraded Standard Pacific (NYSE: SPF) and Ciena (NASDAQ: CIEN) to Neutral from Sell and Sherwin-Williams (NYSE: SHW) to Buy from Neutral.
  
• Goldman added Cytec Industries (NYSE: CYT) to its Conviction Buy List.

Rite Aid (NYSE: RAD), the third-largest operator of drug stores in the U.S., said earlier today that its second-quarter loss was wider than expected.

In the retailer's latest reporting period, the company swallowed a loss of $78.2 million, or 10 cents per share, wider than the year-ago loss of $8.2 million (two cents per share) and four cents below Wall Street's consensus view of six cents per share. While cash flow and tax benefits improved during the quarter, Rite Aid spent more on interest and integration, as well as other items. RAD also absorbed a one-time financing commitment charge of $12.9 million. On the plus side, revenue rose 54% to $6.6 billion; on the minus side, analysts were expecting sales of $6.8 billion. Same-store sales edged 1.1% higher during the quarter.

RAD chairman and CEO, Mary Sammons, participated in a post-earnings conference call and was quoted by Forbes as taking a cheerful view: "The good news is we've seen the margin rate improve and expect sales to do the same."

This weekend's Wall Street Journal (subscription required) said some interesting things about retailers and FedEx Corp (NYSE: FDX).

Over 100 federal lawsuits seeking class-action status against merchants including Wendy's International (NYSE: WEN), TJX Cos (NYSE: TJX), Rite Aid Corp (NYSE: RAD) and Fed Ex Corp (FDX) have been filed for printing too much payment-card information on customer receipts this year alone.

TJX Co, the parent company of T.J. Maxx and Marshalls, reported in January that its computers were hacked and at least 47.5 million customers susceptible to fraud. For the following eight weeks, shares of TJX lost -15%; they have since recovered modestly.

As of December 4th, retailers will be prohibited from printing more than the last five digits of credit-card or debit-card numbers on receipts that are given to customers.

Breaking the law could result in fines as much as $1,000 per transaction.

A spokesman for Fed Ex Kinko's, the Fed Ex unit involved in the lawsuit, denied the charges by saying expiration dates were never identified as an item that could "compromise cardholder security."

Now, to some people this might make sense, but to me I have to scream foul against the claims made against FedEx. Does having one's credit-card expiration date on a receipt make you vulnerable to fraud and identity theft?

I'll stick my neck out on this one folks and say no.

My Discover card expires in May of 2010. Try to get something from that.

MOST NOTEWORTHY: BHP Billiton (BHP), Applied Materials, Inc (AMAT), Advanced Micro Devices (AMD) and Oracle Corp (ORCL) were some of today's noteworthy upgrades:

• Prudential upgraded shares of BHP Billiton (NYSE: BHP) to Neutral from Underweight with a $50 target to reflect capacity expansion in uranium mining and increasing demand for iron ore from China.
• Bank of America upgraded Applied Materials Inc (NASDAQ: AMAT) to Buy from Neutral with a $25 target as the firm believes the company's solar power equipment market is accelerating faster than estimates and guidance.
• Advanced Micro Devices Inc (NYSE: AMD) was upgraded to Neutral from Reduce at UBS citing limited downside to the shares.
• Oracle Corp (NASDAQ: ORCL) was upgraded to Buy from Neutral at Goldman Sachs, where its coverage was transferred to another analyst.

OTHER UPGRADES:

• Credit Suisse added Rite Aid Corp (NYSE: RAD) to its U.S. Focus List.
• Morgan Stanley upgraded O2Micro International Ltd (NADAQ: OIIM) to Overweight from Equal-Weight based on the company's announcement of a settlement with Samsung.
• Wachovia added Lehman Brothers Holdings (NYSE: LEH) to its Focus List. Due to Lehman's record banking fee backlog of $1.03 billion in Q1, the firm believes their banking estimate is "quite conservative."
• Continental Airlines, Inc (NYSE: CAL) was upgraded to Buy from Neutral at FTN Midwest citing the surprisingly strong March unit revenue growth for the upgrade.
• Bear Stearns upgraded Vodafone PLC (NYSE: VOD) to Peer Perform from Underperform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Can Rite Aid (NYSE:RAD) keep moving forward?

The nation's third-largest drug store chain, behind Wallgreens(NYSE:WAG), CVS (NYSE:CVS), and just ahead of oncoming Wal-Mart STores, Inc.(NYSE: WMT) may have finally moved from the side street of growth and onto a boulevard, if not the interstate highway.

In general, analysts project low single-digit sales growth for RAD in 2007, with about 3% growth for the critical same store sales metric. Analysts emphasize sames store sales of stores open at least one year because new stores attract "above typical" traffic in the their first year - people shopping at the store because it is a 'new' place to see, and not out of habit.

Moreover, that 3% sales gain may not seem like much, but it is in the intensely price-competitive, contested drug store sector. For more than a decade, CVS has set the operational tone, and now Wal-Mart is pressuring margins with its lower-price business model.

Jim Cramer featured another SELL BLOCK on CNBC tonight. This is where he reviews some of his past buy stocks and says to take profits or apologizes for being wrong. Tonight wasn't a normal SELL BLOCK: He says to keep some and only take some money off the table.

Cramer's first stock was Goldman Sachs Group (NYSE:GS), and he's made a lot on it. Even though he is way up and close to his first target of $225 (it is now at $213), he said he is NOT SELLING. Earlier today he noted $300 as the target. He thinks the $15 per share earnings is too low and it could hit $25 per share this year.

On Blockbuster Inc. (NYSE:BBI), which is up 48%, and Rite-Aid (NYSE:RAD), which is up 45% from his original picks, Cramer said you can sell some but not all. BBI was part of his favorite speculative stocks for 2007.

eBay Inc. (NASDAQ:EBAY) is up big since his December recommendation and he's scared to do fresh money and take part of it off the table.

He wants to eat crow over Constellation Brands (NYSE:STZ) after it was his call at $27 because of red wine; he says it's a Triple Sell because he got it so wrong. Here is what he said in November about it; it seemed odd for a Cramer pick.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.

There are not many women running big companies. But, those who do, have the same problems as men. Nine of the Fortune 500 are run by women. Four of those companies outperformed the S&P 500. Five underperformed the index.

The number of women CEOs among big companies is only up by one since 2003.

One of the companies run by a woman, PepsiCo Inc. (NYSE:PEP), had a very modest year in the market. Its stock went from $59 to $63, staying above the S&P most of the year. Coca-Cola Co.'s (NYSE:KO) performance was much better.

Alcatel-Lucent (NYSE:ALU) also had a mediocre year. It traded as Lucent for most of the period before merging with French firm Alcatel. Lucent dropped 10% while competitor Motorola Inc. (NYSE:MOT) was up over 10%.

eBay Inc. (NASDAQ:EBAY), another company lead by a female CEO, watched its stock fall from $44 a year ago to $30 now.

Large firms run by women that did unusually well include Rite Aid Corp. (NYSE:RAD), Avon Products (NYSE:AVP), and Xerox Corp. (NYSE:XRX).

When looking at large companies run by women, the most perplexing number coming out it is the fact that there are not more of them. The same subject comes up year-in and year-out, but there is never an adequate explanation.

That will probably be true again next year.

Douglas A. McIntyre is a partner at 24/7 Wall St.