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Rite Aid Corporation Message Board

  • hiltonhead1154 Jul 26, 2013 9:34 AM Flag

    Great news write up on RAD Berko: Libor and Rite Aid BY MALCOLM BERKO Friday, July 26, 2013 7:00 AM

    Hey! Good for you regarding Rite Aid. That’s as cool as a moonbeam. Rite Aid Corp. (RAD-$2.90) started to move up in late January as word circulated that management pulled the pharmacy chain out of a multiyear profit slump. RAD has roughly doubled from the January price of $1.43. However, I wonder why Executive Vice President Brian Fiala and Chairwoman Mary Sammons sold 692,000 shares and 750,000 shares, respectively, last April at $2.46.

    RAD, with $25.3 billion in U.S. sales and 4,700 stores in 31 states, earned 12 cents a share for the 2013 calendar year. But since its $3.9 billion purchase of 1,850 Brooks Eckerd drugstores in 2007, RAD has lost a total of more than $5 billion. And this is the first time in six years that the company has earned a profit. But the $64 question is: Can it continue? The answer: Yes! However, the next question is: Will it continue? And the answer: I don’t know. Although, based upon an impressive stock performance, RAD deserves the benefit of the doubt.

    Apparently, Standard & Poor’s, Reuters, Ned Davis Research, Credit Suisse, Market Edge and Charles Schwab agree. Each has a “buy” or an “outperform” on the stock. Of course, Walgreen Co. and CVS are very positively rated, too.

    The drugstore industry, a monopoly in most cities, is working through a tough environment. CVS, Walgreens and Rite Aid have been losing lucrative “front-of-store” business to discounters and non-drugstore chains such as Wal-Mart and Costco. Why spend $3 for toothpaste, $6 for mouthwash, $7 for shampoo, $3 for soap, a buck and a half for candies, $4 for batteries, etc., when these and other items can be bought for a buck at Dollar General? Last year, RAD generated 68 percent of its revenues from its pharmacy (with Obamacare, the drug business is zooming) and 32 percent from front-of-store merchandise. Those are about the same percentages as Walgreens and CVS have. However, RAD distinguishes itself from them through its emphasis on its 2,900 private-label brands,

    Sentiment: Strong Buy

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