Can Rite Aid Continue Its Mind-Blowing Rally?

This article  was originally published by TheStreet on May 06, 2014

By Sarfaraz A. Khan. Research assistant: Gohar Yousuf

NEW YORK (TheStreet) -- Rite Aid (RAD) is healthy.

Its shares, at close to $8, are up nearly 56% for the year to date and are up more than 200% over the last 12 months, easily outperforming its rivals CVS Caremark (CVS) and Walgreen(WAG). They can go higher still thanks to a company forecast of 3% revenue and income growth for the current fiscal year.

Rite Aid has accelerated the pace of remodeling its conventional stores into "Wellness" stores, which are driving the company's growth. The company is also benefiting from a favorable business environment thanks to the new health care law and an aging population.

Walgreen Still Healthy Despite Missing Earnings Again

This article was originally published by TheStreet on April 2, 2014

By Sarfaraz A. Khan. Research assistant: Gohar Yousuf

NEW YORK (TheStreet) -- You would think by now Walgreen (WAG_) would need a booster shot.

The pharmacy company released anemic quarterly results last week showing margins dropped by more than 120 basis points.

Walgreen reported a year-over-year decline in net income to $754 million, or 78 cents a share, from $756 million, or 79 cents a share. Profit excluding items was 91 cents, 2 cents less than the consensus estimate of analysts polled by Thomson Reuters.

So why is the stock, currently trading around $66, up nearly 15% for the year to date? Because the company is still profitable.

3 Reasons Why Rite Aid Is Right On

This article was originally published by TheStreet

By Sarfaraz A. Khan February 22, 2014

NEW YORK (TheStreet) -- Rite Aid (RAD_), the third-largest U.S. drugstore chain, delivered an impressive performance in 2013. It has cranked out profits for five consecutive quarters, along with a 260% increase in its share price. However, by mid-December, the company's stock plummeted by 10% due to weak earnings guidance for the current fiscal year. The business's shares have now fully recovered, closing at $5.85 on Friday. Some of this recovery can be attributed to positive commentary by Deutsche Bank, followed by an upgrade by J.P. Morgan.

There are troubling aspects to the business, too. Rite Aid's sales growth has slowed amid the rise of generic drugs. 

Despite the slowdown, a weak guidance and the massive rally in 2013, I believe Rite Aid's shares are still attractive for long term investors. 

The company has a solid track record of meeting or breaking the market's revenue and earnings expectations. It has been working to increase its revenues and earnings, while its financial health has been improving. The company has delivered a strong performance in the previous quarters and may continue to do so in the coming years.

Why Am I Staying Bullish on Walgreen?

By Sarfaraz A. Khan and Gohar Yousuf

The leading U.S. drugstore chain operator Walgreen (WAG) has partnered with the European giant Alliance Boots and AmerisourceBergen Corp. (ABC), one of the world’s largest pharmaceutical service companies, to expand its wings outside of North America as it aims to become the biggest drug store chain on both sides of the Atlantic. More recently, Walgreen has also acquired some of Kerr Drugs’ assets. Through mergers and partnerships, Walgreen seeks to considerably grow its top and bottom line, while exercising strict cost discipline, which would improve its margins. The positive impact of these mergers was evident in the recent quarterly results. So far this year, the company’s shares have outperformed the broader market and due to its bright outlook, Walgreen’s shares could continue to move higher in the coming quarters.

Partnerships and Acquisitions

Its strategic partnership with Alliance Boots continues to pay-off as Walgreen achieved $154 million in the combined synergies in the fiscal year, which is $4 million above the high end of its estimate. Walgreen has signed a 10-year contract with AmerisourceBergen and its full worth over a decade is around $400 billion. This partnership has given birth to the biggest buyer of generic drugs in the world. Earlier in September, AmerisourceBergen officially announced that it will distribute pharmaceuticals to more than 8100 Walgreen stores while the three (AmerisourceBergen, Walgreen and Alliance Boots) would collaborate with each other on the global supply chain. Naturally, AmerisourceBergen would become the primary supplier of generics to Walgreen.

In September, Walgreen also purchased some of ... read full article at GuruFocus

Walgreen Eyes Long Term Growth As Market Gears Up For Q4 Earnings

by Sarfaraz A. Khan and Mehreen Tanveer

The leading American drugs retailer Walgreen (WAG) is gearing up to release its quarterly results in the current week. The company earns two-thirds of its revenues from prescription drugs and the rest from general merchandise, over-the-counter medications, cosmetics, and groceries sales.

Monthly Sales

In its previous monthly results for August, Walgreen reported an increase in sales of 5.6% from $5.84 billion last year to $6.17 billion in 2013. Before that, in July, Walgreen reported sales of $6.03 billion, an 8% year-over-year increase. The company has so far reported similar comparable front-end sales growth numbers for both July and August of 2.3% and 2.2% respectively. Similarly, both months witnessed a drop in comparable store traffic of 1.2% (July) and 1.5% (August). On the other hand, basket size increased by 3.5% in July and 3.7% in August.

Fourth Quarter Expectations

Walgreen will report its Q4 results on Tuesday, October 1, before the markets open. For the current quarter, analysts are expecting year-over-year earnings growth of 40% to $0.73 per share and a 5% growth in revenues to $17.95 billion. In the fourth quarter, the company will likely report a LIFO provision of $85 million while net interest expense is expected to be between $57 million and $60 million. 

As far as an earnings beat goes, 2013 has not been a good year for Walgreen. In its current fiscal year, Walgreen has reported … read full article at Seeking Alpha. 

This Executive Is Betting Millions on His Business; Should You Do the Same?

From The Motley Fool

Insider buying by directors and executives of any company is always appealing since they have more information about their business than most outsiders, particularly individual investors (these officials mostly plan their purchases in advance). Insider buying is usually considered a good sign as these executives would only invest when they are fairly certain that the stock is either undervalued or is going to rally in the near future.

A recent report by Forbes has revealed that a director of the leading American drug store company Walgreen (NYSE: WAG) is betting more than $5 million on the success of his firm. But should you invest in this drug-store giant? The company boasts of strong fundamentals with solid stock performance and the recent dip caused by its earnings miss provided a good entry point. 

Insider buying: Ever heard of Stefano Pessina?

Walgreen has recently witnessed insider buying of 34,000 shares for about $1.6 million. This investment has been made by none other than its famed Italian billionaire board member Stefano Pessina, who already invested about $4 million in Walgreen about three months ago.

For those readers who haven’t heard of him, Pessina is