CVS Poised to Do Well Over Long-Term

5/2 - "Chief Financial Officer David Rickard noted on the conference call that consumers may be hesitating to buy large-ticket discretionary items, but small-ticket items like Snickers bars still are finding their way into shopping baskets. Of course, front-end (retail) items only make up about 15% of revenue for CVS, but they are an important driver of transaction size and overall profitability."

"Management is also touting its success with in-store MinuteClinics, serving 300,000 customers this past quarter. At 510 clinics in operation, that works out to 6.5 customers a day, which doesn't sound like droves to me. But CVS has a significant "first mover" advantage over Wal-Mart (NYSE: WMT) and Walgreen (NYSE: WAG) in this new venture."

"Overall, I continue to see CVS as one of the best-positioned retail growth companies. Selling at 21 times its trailing earnings, the stock is priced at a premium compared to the rest of the field...But CVS looks like a solid choice to me at this point."

4/28 - "Walgreen is a solid play. The company beat Wall Street's earnings expectations a month ago when it announced its fiscal second-quarter results. Its sales jumped more than 10% from the year-ago period.

The company said on Friday it completed its tender offer for I-trax(DMX - Cramer's Take - Stockpickr), which it acquired for $5.40 a share. The move is part of Walgreen's plan to build a new health and wellness unit. Furthermore, I like Walgreen's potential. With an aging population and the company's business of selling prescription drugs, I like its chances.

Therefore, I am placing a limit order to buy 10 contracts of the October $30.00 DITM calls (WAGJF) for $6.50 or better."

4/16 - "While maintaining a pristine balance sheet, management continues Walgreen's (WAG) new store expansion strategy. However, beginning in 2006, management began implementing a more aggressive strategy that includes acquisitions...In addition, pharmacy profits are being pressured due to lower reimbursements on some generic drugs and additional pricing pressure from Wal-Mart (WMT), which has entered the retail generic marketplace."

"The Hold rating on Walgreen Company is maintained. Walgreen's is currently selling at 17.0 times trailing 12-month EPS...The target price of $38.75 is based on an 18.5 P/E on trailing 12-month earnings."

5/5 - "Management at the Rite Aid Corporation (RAD) is executing a turnaround strategy centered on increasing the profitability of the existing store base, which includes improving the product mix with generic and private label products. Nevertheless, management acquired the Brooks Eckerd chain prior to a convincing turnaround in profitability.

Also, Wal-Mart's (WMT) initiative to enter the retail generic drug market should pressure the company's pharmacy margin. Importantly, the company has a large debt burden. Given management s EPS guidance for fiscal 2009, the stock is rated a Sell...Due to the company being in a turnaround phase with a high debt burden, the determination of Rite Aid's stock valuation is challenging. Until there is strong evidence of sales improvement, the tentative target price is $2.50 based on a 0.075 price-to-sales ratio (based on expected post-merger annualized sales)."