Finding Ideal Risk/Reward in Pharmacy Stocks: Walgreen Company (WAG), CVS Caremark Corporation (CVS)

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Rite Aid is now slowly exiting its troubled recent past, and with the constant pressure from their two biggest competitors, Walgreen and CVS. The company is regaining market share, and this is evidenced by growth rates. Amongst pharmacies, Rite Aid saw the greatest growth (an amazing 19.5%), their first successful push since 2007. Performance has also been better than expected with 3Q12 EPS going up 9 cents above consensus estimates.

Conclusion

I recommend investing in all three businesses right now with the greatest concentration towards Walgreen. While Rite Aid offers high upside, it also carries significant risk as a result of just hovering between black and red territory. Walgreen is a consistent grower at this point and yet trades at a discount. With momentum and several growth opportunities working in its favor, I expect this discount to be closed.

The article Finding Ideal Risk/Reward in Pharmacy Stocks originally appeared on Fool.com and is written by David Gould.

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