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Walgreen Co. Message Board

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  • prof_martin_van_nostrand prof_martin_van_nostrand Nov 22, 2006 9:42 PM Flag

    This Is Why Walmart Will Kill Walgreens

    I would be the first one to laugh with you at some of the blind-faith that WAG-ers have in the company. Buy it at any price. And for the last 6 years or so, they have gotten nearly a zero return on their money. Probably about the only thing they've gotten is the dividend (but it's getting cheaper and will some day be a buy), but the price is pretty much the same as it was 5 or 6 years ago. You would have gotten a better return from an ING savings account or better yet, bonds.

    However, I do not agree that Walmart will eventually kill Walgreen nor do I believe that that is why the stock price is (currently) sinking.

    It's sinking because it's simply been an expensive stock for the past several years and nobody's buying the pyramid anymore. It will become attractive again soon as the PE ratio compresses more. Sooner or later, it will hit "value" stock status... and then I'll buy.

    As far as your argument goes that people buy everything they need at Walmart, I have trouble with that one too. It's a matter of convenience. I don't shop at Walmart too much because I don't want to go shopping and have to park a half-mile away from the store, fight the crowds and the lines, and turn what should be a 20 minute shopping trip into an hour shopping trip. My time is worth more than that. Stores are also learning that being located near a Walmart is not such a bad thing. Traffic to your store certainly increases and I believe I recall reading that the Walgreen guys are on record as saying they welcome Walmart. It increases traffic, business, and the bottom line.

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