Wal-Mart Stores Inc. (NYSE: WMT) wants to sell you everything it possibly can. Need funeral arrangements? The world's largest retailer wants to help. $4 prescription drugs? It has you covered. In fact, it's hard to think of any product category that Wal-Mart does not seem at least a little covered with. For good reason, too: Wal-Mart has tapped out much of the short-term growth by virtue of it being almost everywhere in the U.S. and selling everything you can possibly think of.

Walgreen (NYSE: WAG - option chain) shares are rising today after the company announced its September sales rose 10.3% higher than the same period last year. Same-store-sales were up 5.3%, buoyed by pharmacy increases of 7%, while other merchandise saw just a 2% gain. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WAG.

WAG opened this morning at $38.35. So far today the stock has hit a low of $37.92 and a new 52-week high of $38.75. As of 11:45, WAG is trading at $38.21 up 2 cents (0.05%). The chart for WAG looks neutral and S&P gives WAG a neutral 3 STARS (out of 5) hold ranking.

Walgreen Co (NYSE: WAG - option chain) shares are headed higher today after the company posted a second-quarter profit of $640 million, or 65 cents per share. WAG's adjusted profit of 69 cents per share beat analysts' estimates of 66 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WAG.

UPS opened this morning at $42.70. So far today the stock has hit a low of $42.40 and a high of $45.57. As of 12:40, UPS is trading at $44.69, up $2.27 (5.3%). The chart for WAG looks neutral and S&P gives WAG a 3 STARS (out of 5) hold ranking.

Walgreen Co. (NYSE: WAG - option chain) shares have moved higher today after the company reported December sales that rose upwards of 10%, including a 4.9% gain in same store sales. In times like these, WAG stayed strong with sales of basic necessities, while seasonal items slumped, but the net result was positive. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WAG.

WAG opened this morning at $25.43. So far today the stock has hit a low of $25.43 and a high of $26.78. As of 12:15, WAG is trading at $26.80, up $1.25 (4.9%). The chart for WAG looks neutral and S&P gives WAG a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just three and a half months as long as WAG is above $20 at April expiration. Walgreen would have to fall by more than 25% before we would start to lose money. Learn more about this type of trade here.

WAG hasn't been below $21 at all in the past year and has shown support around $22.50 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in WAG.

Walgreen Co (NYSE: WAG - option chain) shares are rising today after the company withdrew its buyout bid for Long's Drug Stores (NYSE: LDG). This clears the way for CVS Caremark (NYSE: CVS) to complete its $2.7 billion buyout offer of LDG, which was a smaller offer than that of Walgreen.

It seems that investors approve of this action, since WAG is up a nice chunk today. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WAG.

WAG opened this morning at $26.89. So far today the stock has hit a low of $26.44and a high of $27.27. As of 12:30, WAG is trading at $26.80, up 62 cents (2.3%). The chart for WAG looks bearish and S&P gives WAG a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $25 range.

Though the quarter is winding down, there are still earnings reports to come, including Walgreen Co. (NYSE: WAG) and Kroger Co. (NYSE: KR). Both companies are expected to report profit growth this coming week.

Walgreen is expected by analysts surveyed by Thomson Financial to report third-quarter earnings of 59 cents per share, up 6.8% from the same period of last year, on revenue of $15.1 billion. The company has provided positive surprises in four of the past five quarters -- by two cents in the previous quarter.

Based in Deerfield, Ill., Walgreen is the largest drug store chain in the U.S. in terms of sales, and has more than 6,200 stores in the U.S. and Puerto Rico. In the past year, the company's revenues were $53.7 billion and its net income totaled $2.0 billion. Its long-term EPS growth forecast is 14.0%, which is less than the retail industry average, as well as less than that of rival CVS Caremark (NYSE: CVS). The consensus recommendation of analysts has recently shifted from hold to buy Walgreen.

The share price is up 4.0% since the beginning of the year, and up from 11.6% from a year ago. It trades at a P/E ratio of 20.68. Shares closed Friday at $41.35.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

CVS Caremark Corp (NYSE: CVS) -- with 6,200 stores and a pharmacy benefits management division -- beats Walgreen Co. (NYSE: WAG) -- with 5,997 stores -- hands down in the battle of the brands. It's bigger, its earnings are growing faster, it has a higher P/E and its stock has grown faster over the last year and five years. Walgreen wins on one measure: it has a fatter profit margin.

Here's how the two score on these measures:

• Revenues. $76 billion (CVS) beats $54 billion (Walgreens)
• Earnings growth. 12% (CVS) beats 6% (Walgreens)
• Profit margins. 3.8% (Walgreens) beats 3.45% (CVS)
• P/E. 21.3 (CVS) beats 17 (Walgreens)
• One year stock performance.+16% (CVS) beats -22% (Walgreens)
• Five year stock performance. +250% (CVS) beats +16% (Walgreens)

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Vote in our poll for CVS or Walgreens as your preferred brand, and let us know in the comments why you love it.

MAJOR PAPERS:

• Luqman Arnold, the former UBS AG (NYSE: UBS) president forced out in 2001, wants the firm to split its investment bank from the private client bank, and look at selling the investment bank and asset management business, according to the Wall Street Journal's "Heard on the Street".
• Microsoft Corporation's (NASDAQ: MSFT) bid to acquire Yahoo! Inc (NASDAQ: YHOO) has not gained any steam even though executives of the two companies met this week, the Wall Street Journal reported.
• The Financial Times reported that the landmark merger that created Citigroup Incorporated (NYSE: C) was a "mistake" that failed to benefit the financial services giant's investors, customers and employees, said John Reed, who masterminded the $166B deal with Sandy Weill in 1998. Reed, the former head of Citicorp, has advised Citigroup CEO Vikram Pandit at least to consider spin-offs, sources said.

WEB SITES:

• Walgreen Co (NYSE: WAG) is branching out by acquiring two companies that provide health-care services, BusinessWeek reported, following in its competitor CVS Caremark Corporation's (NYSE: CVS) shoes. Some investors are wary of Walgreen's move, but Mark Wiltamuth of Morgan Stanley sees it as a new growth avenue and as a push into services complementary to drugstores.

Leading drug store chain Walgreen Co. (NYSE: WAG) and upscale specialty retailer Tiffany & Co. (NYSE: TIF) are scheduled to report earnings tomorrow. Here's a quick peek at them ahead of results.

Walgreen has beat earnings estimates in four of the past five quarters. When the company reported first-quarter results back in November, earnings came to 46 cents per share, two cents less than the consensus forecast of analysts polled by Thomson Financial, and up from the 43 cents in the same period of the previous year. For the current quarter, analysts expect 67 cents per share, compared to 65 cents in the year-ago quarter.

The company's earnings per share growth forecast for this year is 9.42%, which is better than the industry average but less than the 30.68% of rival CVS Caremark Corp. (NYSE: CVS). The analysts' consensus recommendation is to hold Walgreen, and has been for the past three months. Shares have risen since hitting a 52-week low of $32.50 in January, and closed Friday at $36.78.

For news about Walgreens that could influence the earnings results, see BloggingStocks' Walgreen coverage.

Walgreen Co. (NYSE: WAG) is trading down around 14% as of this morning after the drug retailer announced that its fourth quarter net income fell to $396.5 million ($0.40 per share) from $412.3 million ($0.41 per share) in the year ago period. Although net sales rose to $13.42 billion from $12.17 billion, the profit shortfall is being placed squarely on lower generic drug reimbursements and higher employee costs and expenses.

Is Walgreen's feeling the heat from the $4 generic prescription drug program announced by Wal-Mart (NYSE: WMT) just over a year ago? It could certainly be seen that way. Same-store sales did increase by 6.3% during the quarter, so although Walgreen's saw increases in terms of sales and revenues, the chain apparently failed to keep its expenses down during the same time. Couple that with the generic drug situation that's still in flux and you have a down quarter. Or, at least that is the way the market is interpreting the numbers as WAG shares are spiking down big-time this morning.

Walgreen's Chairman Jeffrey Rein stated that "Our expenses weren't in line with the level of reimbursements we were receiving. Managing both expenses and lower reimbursements on some generic drugs is my top priority." Seems reasonable, although it's been a while since the generic price cuts seen around the industry started happening. Although Walgreen's sees $2 billion in capital investments in fiscal 2008, the cost situation seems to be a tad out of hand at this time without even considering the capital improvements soon to come.

WAG shares are at $40.44 as of 11:48, down over 14.3% from Friday's close.

Walgreen Co. (NYSE:WAG) opened at $44.28. So far today the stock has hit a low of $44.24 and a high of $45.05. As of 1:00 this afternoon, WAG is trading at 44.10, down 0.04 (-0.1%), well off its morning highs.

After hitting a one year high of 51.60 in September, the stock dropped sharply and has since seen resistance around 47. Tensions over the deal between CVS (NYSE:CVS) and Caremark (NYSE:CMX) wreaked havoc on drug store stocks yesterday, including a big dip in WAG stock yesterday afternoon. Most of these stocks bounced back earlier today but are now sliding with the rest of the market, with the CVS/CMX vote scheduled for tomorrow. The technical indicators for WAG have been bearish and steady, while S&P gives the stock positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $37.50 range. WAG hasn't been below 39.50 at all in the past year, and has shown support around 40. This trade could be risky depending on how the CVS-CMX deal turns out, but the strong support for WAG around 40 could protect this position.

Brent Archer is an options analyst and writer at Investors Observer. (Free Subscription)

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.

The Walgreen Company (NYSE: WAG) was hit with some disappointing news yesterday from the Equal Employment Opportunity Commission. The agency decided to file a class action lawsuit of discrimination based on a 2005 lawsuit brought against the company.

According to an article in today's New York Times, some black employees felt that they were discriminated upon based on their race when the company handed out job assignments. Walgreen has been denying the charges which some officials in the E.E.O.C. have described as the biggest discrimination suit in the past few years.

In the lawsuit both current and former Walgreen employees have accused the company of some pretty serious charges. They claim that Walgreen based job assignments on race and went a step further to geographically locate some black employees in predominantly black neighborhoods or less-desirable ones.

One lawyer from the E.E.O.C. stated that after reviewing some of the case details he determined that Walgreen's had frequently assigned black managers to poorer performing stores and thus limiting their chances of getting coveted job promotions. He also went on to say that black managers were paid less than white employees holding the same positions.

There have been no monetary amounts set forth in the suit as of yet, but the E.E.O.C. laid out their goals in an official statement that they would be seeking monetary damages as well as changes in the overall company policy.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

You think you've seen it all when you hear of customers battling in the aisles of Wal-Mart and Best Buy for Elmo dolls and gaming systems -- just to make sure their kids are not disappointed when gift-opening time comes. While this smacks of unhealthy materialism in many ways, it's the possessive nature of the retail beast come December across this great country of ours.

But when customers start setting things on fire inside a retail store due to a disagreement, odd behavior has reached a new level. This is exactly what happened inside a Walgreens store in Tampa Bay, Florida, as a female customer was apparently not happy with the outcome of a confrontation with a store employee about her change from a purchase.

Solution? Why, set something on fire, of course. Although the customer ended up realizing that she had in fact been given the correct amount of change by the clerk, it was not before the customer walked over to the display of stuffed toys where she had grabbed her purchase previously -- and she set the display on fire. Hmmm. Why do antics like this always seem to happen in Florida?

With Wal-Mart's recent $4 generic drug program apparently not hurting rival drugstore chains, yet, will 2007 hold a different tune for the world's largest retailer?

It is my belief that Wal-Mart's sole goal in lowering the price of over 300 generic drugs to $4 was to drive foot traffic into its stores to fuel sales -- any sales. Wal-Mart needs the boost, as recent same-store sales have been a bust and investors are becoming impatient. Wow -- big surprise!

But, with specialty drug chains like Walgreens and CVS offering more than Wal-Mart can -- mainly, a non-manic shopping experience in many cases, will Wal-Mart's effort hurt these chains? If so, it could be a slim erosion of lower-income shoppers who may -- if not already -- be shopping at Wal-Mart for prescription drugs.

Since the specialty drug chains can't lower their generic drug prices to compete with Wal-Mart, and with profit margins surprisingly surging recently, 2007 should be an interesting year in the drug retailing biz.

Walgreen (NYSE:WAG) and Rite Aid (NYSERAD) both turned in excellent results for the last quarter. Part of the message sent by both companies is that Wal-Mart Stores, Inc. (NYSE:WMT) $4 generic drug program is not hurting them. But Wal-Mart said its November pharmacy sales were up sharply.

Some part of this does not make sense. Some analysts say that the Wal-Mart drug buyers as consumers without insurance who were not going to any store while the mainstream pharmacies cater to patients who are insured. Rite Aid and its large competitors keep more generic drugs stocked in its stores, and their prices are not very different from Wal-Mart's.

If there is a surge in the purchase of generic drugs that is fueling growth at both Wal-Mart and Walgreen, that would be a problem to Big Pharma companies whose patent drug sales are being eroded by generics already.

Again, that answer would be too simple. Some data still appears to be missing.

While the mystery of both Wal-Mart and Walgreen both doing well is still open, one piece of data does appear to be clear. CostCo took a shot at $4 generics and lost money. They moved the price point to $10.

Lost money? Can Wal-Mart be making any at $4? If not, one of Wal-Mart's biggest initiatives could be a bust.

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