CVS Caremark Corporation (CVS), Walgreen Company (WAG): Investing in Your Corner Drug Store

Who is good, who is bad

Walgreen Company (NYSE:WAG) is far and away the best of the three companies for investors, not only because of a great stock history, but also thanks to its strong current numbers. Last quarter, dividends paid out 27.5 cents per share, making it 322 straight quarters of payouts (that’s over 80 years!). It also can boast 37 straight years of increasing annual dividends, with this year seeing a 24% increase in the compound annual growth rate. With a P/E of 21.79, it isn’t exactly affordable, but with a 12.19% ROE and an E/P ratio of 4.58%, it’s probably worth a little splurge, especially with the consistency of its dividend payouts and sales increases.

CVS Caremark Corporation (NYSE:CVS) is a more affordable option for those looking for a solid player in the industry with a P/E of 18.10 and a ROE of 10.65%. It’s a solid option, and it is a growing company with the strong growth in operating profits as well as solid franchise expansion. It also has a higher E/P ratio of 5.54%, giving it better yields than Walgreen. Dividend payouts though are more unpredictable though, so that is something to consider when making a stock purchase.

Rite Aid Corporation (NYSE:RAD) has been the weakest of the three, and it is starting to recognize and correct problems that are making it the third-place contender. On June 7, the company announced the issuance of a $500 million loan to bring down increasing interest expenses, as well as narrowing its EPS range. It beat Street estimates last quarter, so it isn’t a bad company, though with decreasing profits, storefronts, and quarterly sales, it can do a lot better. It is the most expensive stock of the three, despite a share price of around $3/share. Its P/E is the highest at 24.98, while its E/P is the lowest at 3.96%, as well as a negative ROE of -4.8%. It should improve with the new refinancing plan, but it isn’t a buy just yet.

It can be safe to say that the pharmacy business will be a strong mover in the days ahead, even if the stock market is showing signs of slowing down. If the “patent cliff” materializes in 2014, each of these three companies should be able to benefit while drug manufacturers take a bit of a hit. It is a good time to get into your corner drug store’s stock. Business could be booming soon.

John McKenna has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Investing in Your Corner Drug Store originally appeared on Fool.com and is written by John McKenna.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!