|Day's Range||37.11 - 37.11|
Fund manager Bill Smead cites the availability of cheap financing, the drugstore chain’s strong earnings power, and possible participation by Berkshire Hathaway.
Walgreens Boots Alliance stock gapped up after KKR reportedly made a formal offer to take the Dow Jones giant private.
The broader market average all closed at record highs on Friday, as U.S. stocks added to recent gains this week. Financial names led the way higher, while real estate and utility stocks trailed the market.Investors kept a close eye on trade talks between the U.S. and China this week. While a formal resolution has yet to be announced, multiple press reports suggested the two sides could announce a “Phase One” deal before the next set of tariffs are scheduled to take effect, on Dec. 15.Earnings Parade EndingThird-quarter earnings season effectively ended this week, as 446 companies in the S&P 500 index have now announced results. 74% of the names have exceeded expectations, which is above the historical average. On the other hand, aggregate profit is on track to decline 0.5% for the period.Kroger (KR) was the big earnings-related winner this week. The grocery retailer gained 11% a session after providing upbeat profit guidance. On the other hand, online travel names Expedia (EXPE) and TripAdvisor (TRIP) both lost more than 20% a day after disappointing the market with their respective quarterly results.Looking ahead to next week, Cisco Systems (CSCO), Viacom (VIAB) and Wal-Mart (WMT) are scheduled to post quarterly reports. The bond markets are closed on Nov. 9 for the Veterans Day holiday and the economic calendar will be relatively quiet next week. Knowing what and when to buy can be challenging for any investor. However, the fact remains that attractive investments are out there, if you’re willing to dig a little deeper.One such consumer name with strong earnings momentum is worth a closer look and is our Stock of the Week below… Stock of the Week: CVS Health (CVS)The company is probably best known for its portfolio of nearly 10,000 retail pharmacies, but acquisitions over the past several years have broadened its business portfolio.CVS Health provides medical insurance to 38 million users through Aetna and covers pharmacy benefits for 102 million customers, by way of Caremark. In addition, the company treats patients directly through its network of over 1,100 Minute Clinics.The stock gained nearly 8% this week, as management delivered better-than-expected quarterly results on Wednesday.Looking ahead, these gains should keep on coming. Here’s why:The retailer earned $1.84 a share in the third quarter, as revenue increased 36% from the previous year, to $64.81 billion. The sales growth was primarily from the Aetna acquisition, which is approaching its first anniversary. Management said on the conference call that all of the company’s core businesses grew at or above plan in the period.Following the results, 5-stare Cantor analyst Steven Halper raised his price target on the stock to $85, citing:> “In our view, CVS is executing on its strategy to integrate medical and pharmacy offerings to drive differentiation in the marketplace, through efforts such as HealthHUB expansion. Over time, we believe this should drive continued share gains and improvement in operating performance across the company's business units. As the company executes on these initiatives, share valuation should expand from current levels.” CVS Health generates steady cash flow, which it returns to investors. The shares offer a quarterly dividend of $0.25 a share (1.4% yield). Management also paid down $2.9 billion of net debt in the most recent quarter.In the meantime, the company is attractively priced at just 10.1x expected full-year earnings of $7.21 a share. This is an 11% discount to the median industry value and well below the average market multiple.It’s also worth noting that CVS Health carries a Smart Score of 10/10 on TipRanks. This new proprietary metric utilizes Big Data to rank stocks based on 8 key factors that have historically been a precursor of future outperformance.On top of the positive aspects mentioned already, Smart Score says the company has seen positive sentiment from investment bloggers and news.FYI: This is just 1 of the 20+ stocks selected for the Smart Investor portfolio. That’s where we share more detailed insights on our weekly stock picks. You may also want to learn more about how we use TipRanks indicators to find stocks that are primed to outperform. (Discover the Smart Investor portfolio here)
CVS Health (NYSE:CVS) stock got a lift on Nov. 6 after delivering an earnings report that beat on both the top and bottom lines. The company also gave improved earnings estimates for the rest of 2019.Source: Shutterstock Earnings of $1.85 per share exceeded the consensus estimate of $1.77 per share. CVS also reported $64.8 billion in revenue which was above expectations of $62.99 billion. For the full year CVS gave an earnings per share (EPS) range between $6.97 and $7.05. This was an increase from their prior estimate of between $6.89 and $7.In a statement submitted with the earnings report, CEO Larry Merlo said, "Our third quarter results build on the positive momentum we have seen across the company since the beginning of the year. All of our core businesses performed in line with or above expectations, reflecting strong operational execution."InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Under-the-Radar Retail Stocks to Buy Now However the market hates uncertainty. And with the United States entering an election year, the only thing we know is what we don't know. Rising healthcare costs and insurance providers will be among the core issues. That means that CVS stock will likely be treading water as the company, and the industry, is faced with uncertainty. CVS Stock Underperforming the Broader MarketEven though the CVS stock price continues to climb the day after the earnings report, the stock is still down nearly 10% in the last 12 months. And it took until this last earnings report to push CVS stock into the black in 2019.This continues a trend. Over the last five years, CVS stock price is down 17.7%. The company will be spending a lot of their retained free cash flow (FCF) to pay down the debt from its acquisition of Aetna. And while the merging of the two companies has gone smoothly thus far, the syncing of the two organizations will be a question for investors throughout 2020.The company is also facing higher costs associated with renovating existing stores and shutting others. CVS closed 46 stores this year and is projected to close 22 more stores next year. A Complicated Business Just Added RiskCVS Health is the country's second-largest pharmacy chain behind Walgreens (NASDAQ:WBA). It is also the country's largest pharmacy in terms of total prescription revenue. One of the real stories behind the country's growth is that it has become one of the nation's largest pharmacy benefits managers (PBMs). The PBM business determines which drugs are covered for patients and negotiates price discounts with the pharmaceutical companies.In 2018, the company paid $40 billion to acquire Aetna, which put the company in the health insurance business. With this acquisition CVS believes it will be able to achieve even larger economies of scale. CVS already has some of the lowest per claim costs in the industry.CVS Health's PBM and drug distribution businesses were already exposed to political and regulatory risks. By adding health insurance to the mix, CVS has put itself more tightly in the crosshairs. Particularly as more attention is being given to healthcare costs.The Centers for Medicare and Medicaid Services project U.S. healthcare spending to rise to $6 trillion by 2027, a 5.5% annualized growth rate. In the short-term, this has been a lift for CVS earnings. However, rising healthcare costs are leading to further cries from public and private payers for companies to cut costs. This puts pressure on margins that are already thin. Is CVS Stock a Buy Right Now?I like CVS stock for income investors. The company has a dividend yield of near 3%. And with a forecast for modest, single-digit growth through 2020, the dividend should be safe. To be fair, CVS did end a 14-year history of dividend growth in 2018. After taking on $40 billion to purchase Aetna, the company is maximizing its FCF in order to deleverage its balance sheet.But the stock is not a good play for growth investors. The company has a good valuation at just under 10 times projected earnings. However, prior to its most recent earnings report, CVS stock was negative for the year. Even with the surge, CVS Health stock is up just over 10% in 2019.And many of the same industry pressures remain. The industry still is facing government scrutiny of drug prices. There is ongoing pressure as Amazon (NASDAQ:AMZN) continues to become a larger presence in the pharmaceutical delivery space.CVS has been a solid performer with good management. Its recent acquisition of Aetna is a bold move that, while it contains risks, is another example of the company's intention to provide good value to its shareholders. And that may prove to be the case, but I don't see a strong growth story for the stock in the next year.As of this writing, Chris Markoch did not have a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Sell Before They Roll Over * 5 Beaten-Up Stocks to Buy That Could Be Saved By An Acquisition * 4 Startup Stocks Getting Smashed The post CVS Stock Finds Itself in a Good Place at a Bad Time appeared first on InvestorPlace.
Rite Aid (NYSE:RAD) has been a slow-motion train wreck for years. Since its highs of $173 in early 2017 to its less than stellar lows of $5.50, investors have left RAD stock for dead.Source: NYCStock / Shutterstock.com And, it's all thanks to heavy competition that sent revenue streams plummeting, taking with it margins and profits with a debt-heavy balance sheet to boot. While the stores have a partnership in place with Amazon (NASDAQ:AMZN), even that won't save the stock.Granted, Rite Aid stock has shown some signs of life in recent weeks, rallying just above $10. It even just broke above double-top resistance, and pushed above its 200-day moving average. Unfortunately, as technically attractive as that may appear, it's only a temporary reprieve.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFundamentally, RAD stock is still struggling -- with no signs of improvement. Compounding the issue, management has no clear way to fix the situation. Therefore, the RAD stock price has no clear catalyst to push it higher and keep it there.In my opinion, investors would be smart to avoid Rite Aid stock altogether. Deciphering the Writing on the WallTo be sure, new CEO Heyward Donigan, the company is taking steps to return to profitability. "I see tremendous opportunity to revitalize the company's position as a leader in meeting the health and wellness needs of customers and patients through our store and pharmacy benefit management platforms," Donigan stated at the time of her hiring in August. * 7 Earnings Losers That Were Hit Hard This Season She told participant on the company's September 2019 conference call Rite Aid is ripe for a turnaround, as it "… needs a clear new strategic vision and a pathway to execution that drives future organic growth and profitability."As for trends in the industry, RAD stores have joined rivals CVS Health (NYSE:CVS) and Walgreens Boots Alliance (NASDAQ:WBA) carrying cannabis-derivative products made with the increasingly popular cannabinoid known as cannabidiol (CBD). In the cannabis space more broadly, there are at least 23 industries looking to capitalize on the growing legalization of marijuana, according to AgFunder News. Those sales could offset or top what Rite Aid gave up earlier this year when it announced it would no longer sell electronic cigarettes amid what then called an "epidemic" of teen vaping; in retrospect, they were ahead of the news.Source: Statista.comWhile she mentioned that health insurance plans could be key to a turnaround, we have to consider management is struggling under the weight of monster debt of more than $3.5 billion. To be honest, unless something miraculous happens, RAD stock is a dud. * 7 Under-the-Radar Retail Stocks to Buy Now "You have a debt-burdened specialty retailer that was slow to pivot to e-commerce disruption, meaning bigger peers have passed the company up and consumers have mostly abandoned stores. Now, because Rite Aid's cash flows are constrained and have to go toward paying off debt, the company doesn't have the necessary firepower to make this pivot and compete," Investorplace contributor Luke Lango wrote last month. Bottom Line on Rite Aid StockRAD stock is banking on a turnaround underdog story with a new CEO at the helm. Unfortunately, with heavy debt burdens, poor management, and no real plan to move the needle, I would avoid RAD stock like the plague. The writing is on the wall here. While the stock could move higher on hope short-term, the long-term story is not good. You can find better investment opportunities elsewhere. For me, Rite Aid is a dud.As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Sell Before They Roll Over * 5 Beaten-Up Stocks to Buy That Could Be Saved By An Acquisition * 4 Startup Stocks Getting Smashed The post Even With New CEO, Debt-Laden Rite Aid Stock is Best Avoided for Near Term appeared first on InvestorPlace.
Back in mid-July, I wrote on InvestorPlace that it looked like shares of beaten up pharmacy retailer CVS (NYSE:CVS) were ready to breakout higher. The headwinds, which had plunged shares into dirt-cheap territory, were going to ease going forward, meaning that there was no reason for the dirt-cheap valuation to stick around.Source: Shutterstock Fast forward four months. CVS stock has risen 25% -- to the S&P 500's 3% gain over that same stretch -- thanks to exactly that. Headwinds have eased and have been replaced by tailwinds. The numbers and narrative have improved. Investors are realizing CVS stock shouldn't be this cheap. So they are gobbling up shares in bulk, and CVS stock is flying higher.The most recent update here is that CVS reported very strong third quarter numbers in early November that were much better-than-expected on all fronts. All of the businesses are growing, profitability is improving, and the balance sheet is being cleaned up. The outlook is also getting brighter.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Sell Before They Roll Over The implication from this earnings report is that at just 10-times forward earnings, CVS stock isn't priced for the company to be on such a roll. This discrepancy means that CVS stock should continue to outperform for the foreseeable future. CVS Is Marching HigherIf the third quarter print confirmed anything, it is that CVS is on a roll thanks to new growth initiatives.Taking a step back, the big picture here is that CVS is a specialty pharmacy retailer that once co-existed with the likes of Walgreens (NASDAQ:WBA), Rite Aid (NYSE:RAD), and others in the specialty pharmacy world. Then, more players moved more aggressively into the space, including Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT), Target (NYSE:TGT), and a slew of online pharmacies. This competition surge created traffic and margin headwinds for CVS, and CVS revenues, profits, and stock price have consequently all sunk over the past few years.The writing was on the wall. CVS needed to differentiate itself in order to survive the competition surge in the specialty pharmacy retail world.That's exactly what they did, and the Q3 numbers imply that these new initiatives are working. CVS acquired Aetna, and has since leveraged that acquisition to launch HealthHUB concept stores, which are focused on personalized and localized healthcare services. These HealthHUB stores performed exceptionally well in Q3.At the same time, CVS has doubled down on MinuteClinic services, and success of these services is a key reason why the company's retail business continues to tick higher. New programs like Maintenance Choice are driving materially positive revenue and profit gains in the pharmacy segment as well.The whole CVS growth narrative is perking up thanks to new growth initiatives, which have successfully differentiated CVS from the pack in the specialty pharma retail world. Importantly, this differentiation paves the path for the CVS growth trajectory to continue to improve over the next few years. Shares Remain Unreasonably CheapGiven that the CVS growth trajectory projects to keep improving thanks to successful differentiation, CVS stock is unreasonably cheap at current levels.Just look at the multiples: * Forward P/E: 10 * 5-Year average forward P/E: 13 * Sector average forward P/E: 14 * Market average forward P/E: 17 * Consumer discretionary sector average forward P/E: 21In other words, relative to its historical self, CVS stock is trading at a 20%-plus discount today. Relative to peer stocks across various other industries, the stock is trading a discount of anywhere between 30% and 50%.That's just too cheap for CVS stock. At one point in time, this discount was warranted given the bleak growth prospects. But, the growth prospects today are starting to perk up thanks to successful differentiation of the business model through HealthHub, MinuteClinics, Maintenance Choice, and more. The balance sheet is also being deleveraged, so there remains little reason why shares should be so cheap.The implication? Shares won't remain this cheap for long. So long as CVS stays on a roll, the multiple underlying CVS stock will continue to expand, and this consistent expansion will keep CVS stock on a healthy uptrend. Bottom Line on CVS StockI loved CVS stock back in July when it was down around $50. I still like CVS stock up here around $70. Shares remain too cheap given the company's improving growth prospects. This favorable discrepancy will keep CVS stock on a solid uptrend for the foreseeable future.As of this writing, Luke Lango was long CVS and WMT. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Sell Before They Roll Over * 5 Beaten-Up Stocks to Buy That Could Be Saved By An Acquisition * 4 Startup Stocks Getting Smashed The post Stick With the Rally in CVS Stock appeared first on InvestorPlace.
From understanding your risk tolerance to maintaining emotional control, achieving your retirement goals takes a much different investing approach than regular stock trading.
You can get paid to shop on Thursday — if you play your credit cards right. Online shoppers who browse deals through RetailMeNot’s discount and coupon code site during this 24-hour window can get generous cash back offers that are double or triple those of many rewards credit cards. RetailMeNot has dubbed this Cash Back Day, and hundreds of stores, including Amazon (AMZN) Target (TGT) Home Depot (HD) Macy’s (AT:MACY) Disney (DIS) and CVS (CVS) are offering rewards for purchases made on their websites Nov. 7.
CVS Health and Humana earnings both topped third-quarter estimates early Wednesday. CVS stock rose to a 2019 high while Humana neared a buy point.
A growing number of skeptics are casting doubt on the financial case for taking Walgreens Boots Alliance private in a debt-financed buyout.
U.S. stocks were near flat on Wednesday as a report that the U.S.-China deal could be delayed until December increased worries about how long the trade war will go on, while healthcare shares supported the market. A senior official of the Trump administration told Reuters a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December, as discussions continue over terms and a venue. The year end is typically a bullish time for stocks, but the trade war is still a risk, said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
The three major U.S. stock market indexes fell as hopes that the U.S. and China would soon sign a partial trade agreement dimmed.
Nov.07 -- CVS Health President and Chief Executive Officer Larry Merlo talks with Bloomberg’s Drew Armstrong at The Year Ahead Summit in New York about the health care landscape for 2020.
Yahoo Finance's Julie Hyman, Adam Shapiro, Akiko Fujita, David Nelson of Belpointe Asset Managment and Dane Hamilton, U.S. Healthcare Editor at Mergermarket and contributor at Dealreporter discuss what the move means for investors.