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  • investora2z investora2z Apr 8, 2013 1:11 PM Flag

    Amazing run continues

    WAG recently expanded services at its 370 in-store Take Care Clinics. The clinics will now diagnose, treat and monitor patients with more chronic conditions like diabetes. The company wants to take advantage of the increasing healthcare market where growing diseases and health system overhaul will increase the number of uninsured. Further, the market is extremely competitive and the low margins make it imperative to identify and bring good products to its shelf. MusclePharm (MSLP), which has had a good association with WAG, has recently launched a new range FitMiss which is a nutritional supplement for active women. MSLP which reported sales of $78 million in 2012, owes part of its success to WAG. WAG has to bring in more new products, keep the cost rationalization on top of its mind and continue to expand services to maintain competitive advantage. Meanwhile the stock is on an amazing run since July last year when the dispute with Express Script over reimbursement rates was resolved. It is up 42% over 52 weeks, and is up 65% from its 52 week low ($28.53). It is presently trading well above its 50 and 200 DMA. The volumes have tapered down a bit over the last few days. Now, the 10 day average (5.6 million) is lower than the 3 months average (6.9 million). WAG has paid dividends continuously since last several decades, and the current yield of 2.2% is based on a modest payout of 47%. Interestingly, despite such a good run, the price to sales ratio is only 0.63. The PEG, therefore, is low at 1.09 indicating good scope for more capital appreciation. This is also signaled by the fact that forward P/E is 12.74 which is significantly lower than the current P/E of over 20. Future growth will obviously be propelled by new products and better marketing.

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