The stock will also benefit from the $2 billion stock buyback plan in the next three years. Walgreen delayed this plan last year, causing trouble for short-term investors. Walgreen made a large stock purchase with Alliance Boots, so it did not repurchase much stock last year. Now Walgreen appears to be returning to the former method, which is great news for long-term investors.
Walgreen Company (NYSE:WAG)’s stock has been increasing and there is reason to believe that the upward trend will continue. Many investors are concerned that they missed the boat on the stock gains, but I don’t believe that is the case. There is still headroom for the Walgreen stock to rise.
Walgreen offers a good yield, slightly over 2.20%, and its earnings are projected to increase approximately 14% this year, which is better than its major competitors. For example, compare this to CVS, which has a yield of a little over 1.5% and is expected to only have a small amount of growth this year. Investors may be attracted to the higher yield that Walgreen pays.
Wal-Mart also offers competition to Walgreen, paying a higher yield, which is slightly over 2.50%. On the other hand, Wal-Mart is projecting lower growth than Walgreen.
Express Scripts Holding Company (NASDAQ:ESRX) could be attractive to investors, but it is not likely to get much attention until it starts offering a dividend. Investors appear to be unsure if Express Scripts will be able to achieve its targeted growth this year. Express Scripts stock is selling about 13 times forward earnings, but its projected growth is over 15%. Investors don’t appear to be confident that Express Scripts can achieve that sort of growth this year.
The bottom line
Pharmacies such as CVS are always attractive to investors. Companies like Express Scripts Holding Company (NASDAQ:ESRX) also get attention from investors, but it appears that Walgreen is making sound decisions now. It is going back to more reliable, time-tested strategies, and this method has been paying off. The Express Scripts problem is in the past, and Walgreen stock is going up. If it continues to makes safe decisions, I feel that Walgreen will be able to win customers back and that sales will continue to improve. Thus, I think Walgreen Company (NYSE:WAG) stock will have a positive outlook in the future.
The article The Pharmacy America Trusts Fights Back originally appeared on Fool.com and is written by Nauman Aly.
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