CVS is the largest of the three firms, and the market leader. CNBC’s Jim Cramer has that, of the three firms, he prefers CVS because of its ownership of Caremark.
Analysts at Wells Fargo gave CVS an outperform rating in May for much the same reason. They have a $70 price target on the stock. Caremark is the second largest pharmacy benefit manager in the US, meaning that it’s involved directly in the process of negotiating drug benefits. Wells Fargo believes that its ownership of Caremark allows to better manage the shifts taking place in the industry.
Walgreen is a pure pharmacy retailer, and its retail operations are the best of the three. The company has begun to remodel its stores, leading FUBU’s Daymond John to compare the company to Apple.
It also pays the highest dividend at 2.50%, and is emphasizing its in-store clinics. Earlier this year, it said these clinics (which it has rebranded “Healthcare Clinics”) would start managing chronic care conditions.
Of the three stocks, CVS is likely the safest pick, though Rite Aid offers the potential for outsized gains. Walgreen’s remodeling initiative and dividend makes it attractive, but it’s the most expensive stock of the three.
Investing in Rite Aid
Greenlight doesn’t have a consistent track record of holding stocks for years, so it’s possible that the fund already dumped its stake. Moreover, as Einhorn has said, investors should never blindly follow his fund into a particular stock.
Yet, Rite Aid does remain an attractive investment. It’s in a sector — pharmacies — that looks to be benefiting from the ACA and retirement of the baby boom generation.
All three pharmacy stocks have been great investments this year, and could continue to reward shareholders going forward.
The article David Einhorn Bets on a Rite Aid Turnaround originally appeared on Fool.com is written by Sam Mattera.
Sam Mattera has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.