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Walgreen Company (WAG), Rite Aid Corporation (RAD): This Executive Is Betting Millions on His Business; Should You Do the Same?

Walgreen Company (NYSE:WAG)’s stock has risen by 39.6% this year, easily outperforming the S&P 500 ETF (SPY) and CVS, which are up 20.8% and 29.1%, respectively in the same period. Although Walgreen has been far behind Rite Aid Corporation (NYSE:RAD), which has risen by 106.5% in 2013, Walgreen’s strengths lie in its solid 2.5% yield, highest return on equity among its peers and reasonable operating margins.

Interestingly, despite the gigantic 38% dividend-hike announced in December 2012, CVS still gives a significantly lower yield than Walgreen.

Walgreen RiteAid CVS Caremark
Stock YTD 39.60% 106.46% 29.14%
P/E trailing-12 months 22.42 11.81 19.27
P/E current yr annual profit est 16.377 19.13 15.55
Yield 2.50% N/A 1.50%
ROE 12.62% N/A 10.65%
Op Margin 4.82% 3.36% 6.11%

Therefore, I believe that due to the insider buying, its reach outside of the United States with possibilities of increasing exposure in the emerging markets – particularly with Pessina on board – Walgreen Company (NYSE:WAG) looks attractive as a long-term investment. Moreover, its industry leadership, an expected increase in revenue from new partnerships and loyalty program, coupled with a solid financial position makes it even more appealing.

Sarfaraz Khan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article This Executive Is Betting Millions on His Business; Should You Do the Same? originally appeared on

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