|Bid||7.29 x 1100|
|Ask||7.30 x 2900|
|Day's Range||7.12 - 7.50|
|52 Week Range||5.04 - 27.20|
|Beta (3Y Monthly)||1.72|
|PE Ratio (TTM)||N/A|
|Earnings Date||Sep 26, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||6.00|
Rite Aid (RAD) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
Rite Aid (RAD) gains from increased immunizations and clinical pharmacy services, which are likely to continue. Decline in prescription reimbursement rates is a headwind.
The Rite Aid Foundation announced today that 390 students have been selected as 2019 Folds of Honor Educational Scholarship recipients through its KidCents program. This year’s scholarships, which total more than $1.9 million, begin a three-year, $6 million commitment to Folds of Honor, a nonprofit organization that provides educational scholarships to children and spouses of fallen or disabled service members. This new three-year commitment is The Rite Aid Foundation’s third contribution to Folds of Honor.
There's an intriguing case for Rite Aid (NYSE:RAD) stock at the moment. For a long time, bulls have been awaiting a turnaround that can boost Rite Aid stock, and a new CEO has finally come on board. Meanwhile, with the RAD stock price down over 95% from its early 2017 highs, the stock's valuation seems like it should be reasonable.Source: J. Michael Jones / Shutterstock.com And there is an intriguing, albeit high-risk, positive case for RAD stock at these levels.The current RAD stock price of $7.50 indicates a market cap of just under $400 million. The company's net debt (adjusted for the pending sale of two distribution centers) is over $3.2 billion. If the company's enterprise value of roughly $3.6 billion rises by just 10%, Rite Aid stock will almost double.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut I've been a longtime bear on RAD stock for reasons that go to the heart of the current bull case. The easy bull argument is that former CEO John Standley ran Rite Aid into the ground. Certainly, the revised deal with Walgreens (NASDAQ:WBA) was a massive disappointment. But the pressures on Rite Aid are the same pressures facing the rest of the industry.And so it's a bit too simplistic to believe that a new CEO can simply "fix" Rite Aid all that quickly amid the pressures on the sector. Meanwhile, the company's debt creates a major risk to Rite Aid stock going forward. Much like General Electric (NYSE:GE), a popular turnaround pick, new leadership can help RAD stock. But there are significant obstacles that add risk to the company's outlook. * 7 Momentum Stocks to Buy On the Dip Moreover, there are other ways, besides buying RAD stock, to bet on the turnaround of the sector. At the very least, those who are bullish on RAD stock should consider those options. Not Just Rite Aid's ProblemIt's important to put the performance of Rite Aid stock in the context of the pharmacy space. The entire industry is struggling right now. Fred's (NASDAQ:FRED), which was going to buy Rite Aid stores as part of the original Walgreens takeover, just filed for bankruptcy. Walgreens stock touched a five-year low last month. CVS Health (NYSE:CVS) bounced off its lowest levels in six years this spring.The RAD stock price has fallen further than other pharmacy equities. But that's because Rite Aid has more debt than its peers.In fact, since the beginning of 2018, Rite Aid stock has fallen 81%. But its enterprise value (its market cap plus the face value of its debt) is down only 22%. Over the same period, Walgreens' EV has dropped almost 20%, but its shares are down only 24%.It's clear that the entire sector is struggling with pressures. Reimbursement rates from insurance companies are falling. And sales of OTC products, perhaps due to competition from the likes of Amazon.com (NASDAQ:AMZN), remain weak.Those pressures, combined with higher fixed costs, have dragged down the sector's profits. Indeed, the operating profit of Walgreens' U.S. pharmacy business fell in the third quarter. Should Investors Buy CVS or Walgreens Instead of Rite Aid Stock?For RAD stock to finally rally, those industry pressures have to ease. But if that happens, investors can benefit by buying CVS or Walgreens instead. In terms of EV/EBITDA, Rite Aid stock is only modestly cheaper than CVS and Walgreens. As a result, investors would likely be better off buying one of the larger companies, which are big enough to muddle through if the environment doesn't improve.In an uber-bullish scenario, Rite Aid stock will no doubt outperform its peers (as it did after the financial crisis). That's because not many shares of RAD stock are available, so Rite Aid stock price can jump tremendously if its EBITDA increases and its free cash flow and net income move into the black from their current stagnation.But if the sector remains stable, Rite Aid stock will likely continue to underperform. And with $3 billion in debt due in 2023, and the company's net debt over six times its annual EBITDA, RAD may not be able to refinance.Rite Aid stock will outperform in a bullish scenario if the industry's pressures finally ease. In any other environment, Walgreens or CVS will likely do better. So investors who want to bet on the industry have to at least consider buying the shares of those larger operators instead. What Level Does the RAD Stock Price Need to Reach to Outperform Rite Aid's Bonds?There's another option to consider: Rite Aid's bonds. Like the RAD stock price, the prices of Rite Aid's bonds are at multi-year lows.The 6.125% bonds that mature in April 2023 have a current price of 79 and an annual yield to maturity of 13.7%. Longer-dated issues are potentially more attractive. The 7.7% February 2027 bonds are priced at 50, with a YTM of 21.2%.The 6.875% bonds that mature in 2028 have a similar price, with a yield to maturity of 18%.The bonds are less risky than Rite Aid stock, since secured bonds may have some value even if RAD goes bankrupt.And it's important to realize that RAD stock needs to climb substantially just to outperform those bonds. To top the April 2023 bonds, RAD stock price would need to reach $12. To beat the 2027 bonds, the RAD stock price would need to soar over 320%.The bond prices have an impact on Rite Aid stock because high demand for the bonds may cause demand for the equity to be low. And it's worth noting for near-term traders that the bond prices haven't moved lately, even as the RAD stock price has bounced 50% off its August lows. Consequently, the bonds are more attractive than they were a month ago.In the most bullish scenario, Rite Aid stock will outperform Rite Aid's debt. It will also outperform CVS, and Walgreens, and probably over 90% of the stocks in the market. The sheer size of the company's debt is why RAD stock has fallen so far - and why RAD stock can soar if it's finally able to lower its debt.But there's a long path to that bullish scenario, and some outside help is needed. And in anything less than a blue-sky outcome, investors likely will do better if they buy alternatives to Rite Aid stock.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Momentum Stocks to Buy On the Dip * 7 Dow Titans Breaking Higher * 5 Growth Stocks to Sell as Rates Move Higher The post Why Rite Aid Stock Will Probably Underperform Alternatives appeared first on InvestorPlace.
In early September, we have seen a violent, significant and largely unprecedented shift in the investment landscape from momentum stocks to value stocks. Month-to-date, the iShares Momentum Factor ETF (BATS:MTUM) is down more than 1%, while the iShares Value Factor ETF (BATS:VLUE) is up more than 7%.What's happening under the hood? Long story short, investors were hyper-concerned about a recession in August. In response to rising recession fears, investors ditched economically sensitive value stocks that require a good economy to head higher, and piled into momentum growth stocks that don't require a good economy to head higher (because they have such strong secular tailwinds).In September, though, recession fears have backed off. The Federal Reserve has sounded as dovish as they've ever sounded. China and the U.S. have resumed trade talks. Long bond yields have moved higher. The curve has mostly un-inverted. In response to these easing recession fears, investors are unwinding their momentum trade. That is, they are booking profits on their momentum stocks, and buying the dip in value stocks, since these stocks should now move higher that the economic outlook is improving.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, the September momentum-to-value shift is actually a vote of confidence in the economy from the equity markets.The last time a momentum-to-value shift like this happened? Mid-2016, when the global economy was in the process of shaking off slowing growth headwinds.What happens next? All stocks go higher -- momentum stocks and value stocks. Broadly, the global economy isn't going into a recession. On the contrary, conditions are improving. As conditions do improve, both value and momentum stocks will move higher over the next few quarters. * 10 Recession-Resistant Services Stocks to Buy The implication right now? Selectively buy the dip in high quality momentum stocks. Which ones are on my shopping list? Let's take a look. Momentum Stocks to Buy on the Dip: Shopify (SHOP)Source: Beyond The Scene / Shutterstock.com YTD Gain Before Selloff: Almost 200%% Off High: 15%First up, we have e-commerce solutions provider Shopify (NYSE:SHOP), which -- thanks to a near 200% gain from January to August 2019 -- has been one of the most unstoppable stocks this year. But, as we all know, there is no such thing as an unstoppable stock. Indeed, SHOP stock has been stopped recently. Over the past few weeks, the stock has shed 15% as investors have booked profits on what has been an 800% rally over the past three years.The "buy the dip" thesis on SHOP stock revolves around three things.First, the fundamentals underlying Shopify stock remain rock solid -- the company just reported (yet another) 50%-plus volume growth quarter with robust margin expansion, and the underlying decentralization and direct retail trends supporting the growth narrative remain vigorous. The only thing that has changed is the stock is now cheaper.Second, this momentum trade unwind won't last forever. It's tough to see investors selling Shopify stock and buying Rite Aid (NYSE:RAD) stock for the foreseeable future. They won't. This momentum-to-value shift is short lived, and is simply a reversion to the norm (momentum's out-performance relative to value got over-extended in the summer). Once we do get back to the norm, investors will pile back into SHOP stock because this stock is supported by one of the most robust growth narratives in the market.Third, excluding the late 2018 selloff, corrections in SHOP stock usually bottom out once they hit a 20% peak-to-trough decline. We are almost there today, so it looks like the worst of this sell-off is over. Okta (OKTA)Source: Sundry Photography / Shutterstock.com YTD Gain Before Selloff: About 120%% Off High: 24%Next up, we have cloud security and access management company Okta (NASDAQ:OKTA). Through late July, OKTA stock was up a whopping 120% year-to-date. Ever since, though, the stock has come crashing down, and now trades in bear market territory, or more than 20% off recent highs.Much like the selloff in SHOP stock, the August/September selloff in OKTA stock is a buying opportunity. The rationale? The fundamentals remain great and the optics are improving.Big picture, Okta is a hyper-growth cloud player in the secular growth identity access management market, which is essentially an identity-centric approach to data security and management. This market is very big (around $10 billion in 2018), is growing very quickly thanks to widespread cloud adoption and the mainstream emergence of IoT devices (13% compounded annual growth rate projected into 2025), and Okta is rapidly gaining share in that market (roughly 1% share in 2015, to 4% share in 2018). Assuming Okta can continue to expand share in this market thanks to its exclusive focus on cloud IAM (comps in this space have many different verticals, of which IAM is just one), then Okta projects as a big revenue grower for a lot longer.At the same time, gross margins are really high, and approaching 80%, while the opex rate is rapidly falling with revenue scale. This dynamic will persist for the foreseeable future, meaning Okta projects as big time profit grower for a lot longer, and that reality provides a favorable fundamental backdrop for OKTA stock. * 10 Big IPO Stocks From 2019 to Watch Meanwhile, as mentioned earlier, the optics surrounding big growth momentum stocks should improve over the next few months. As those optics improve, they will converge on favorable fundamentals, and ultimately spark a nice rebound rally in OKTA stock. The Trade Desk (TTD)Source: Shutterstock YTD Gain Before Selloff: Over 120%% Off High: 23%Third on this list of momentum stocks to buy on the dip is programmatic advertising leader The Trade Desk (NASDAQ:TTD). Once up over 120% year-to-date, TTD stock has come crashing down over the past few years, and presently trades in bear market territory.The next move in this stock will likely be higher for three big reasons. First, the fundamentals remain supportive of sustained long-term growth. Second, the optics surrounding TTD stock will improve going forward. Third, the stock is closing in on major technical support.On the first point, The Trade Desk is the leader in the secular growth programmatic advertising market, which entails automating and optimizing the ad transaction process by using data and algorithms. As the global economy becomes increasingly automated and data-driven, so will the global advertising world, meaning that at scale, The Trade Desk's programmatic ad platform will be a very important and relevant piece in the global ad machine.Right now, less than a percent of global digital ad spend flows through The Trade Desk's ecosystem. Thus, the runway for growth here is quite robust in the big picture.On the second point, as mentioned earlier, the momentum-to-value shift won't last forever. Once it ends -- and it should end soon -- momentum stocks will come back into favor, providing an upward lift for TTD stock.On the third point, TTD stock is rapidly closing in on its 200-day moving average, which has -- historically speaking -- provided a significant level of support for the stock during selloffs. If TTD successfully tests and holds this support level, the next move here will almost assuredly be higher. Pinterest (PINS)Source: Nopparat Khokthong / Shutterstock.com YTD Gain Before Selloff: Over 90% (from its IPO price)% Off High: 20%Another momentum stock that looks compelling on recent weakness is social media and digital ad platform Pinterest (NYSE:PINS). Pinterest went public in April 2019 at a price of $19 per share. By mid-August 2019, PINS stock had nearly doubled from its IPO price. Since, the stock has tumbled alongside other momentum names and presently trades 20% off those August highs.The bull thesis on PINS stock goes something like this. Pinterest has always been a great company. They operate a unique and differentiated social media platform that is used for visual discovery and inspiration, and which importantly: 1) has very little use-case overlap with other social media platforms, and 2) is a perfect place for ads, since consumers are going to Pinterest looking for something. Consequently, as this company just starts to ramp up its ad business, the next few years should comprise very big growth since advertisers will love the unique attention they get through the Pinterest platform.Despite all this greatness, PINS stock simply became too richly valued in August. It's now sold off -- to much more reasonably valued levels. As such, the fundamentals check out here, and imply that this selloff is a buying opportunity. * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk So do the optics, which -- as mentioned before -- should improve surrounding all momentum stocks over the next few months as this momentum-to-value shift stops. Net net, then, favorable fundamentals and optics should drive PINS stock higher from today's lows. Splunk (SPLK)Source: Michael Vi / Shutterstock.com YTD Gain Before Selloff: Over 30%% Off High: 18%Another cloud momentum stock that looks good on this dip is big data company Splunk (NASDAQ:SPLK). SPLK stock has been less hot this year than its momentum peers -- at its peak, it was up just 30% year-to-date. But, this relative under-performance in 2019 has not shielded the stock from recent momentum stock weakness. At current levels, SPLK stock trades nearly 20% off recent highs.Time to buy? I think so. Splunk is at the heart of arguably the biggest growth narrative in the market today -- data-driven decision making. Broadly, everyone and their best friend are starting to understand that data is the future of everything, since it allows individuals and companies to make better, smarter and faster decisions. Consequently, enterprises everywhere are doing all they can to get their hands on data. But, what good is data if you can't understand it, and glean actionable insights from it?Insert Splunk. This is exactly what Splunk does. They help enterprises of all shapes and sizes turn their raw machine data into actionable insights. Consequently, as companies continue to pivot into data-driven decision making processes over the next several years, they will adopt and more heavily lean into Splunk's services.The long-term implication? Splunk's revenue and profit growth trajectory will remain robust for a lot longer. As it does remain robust, SPLK stock will continue to move higher, meaning that recent weakness in the stock is nothing more than a long-term buying opportunity. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com YTD Gain Before Selloff: About 60%% Off High: 26%One momentum stock that has been hit particularly hard over the past few weeks is digital education company Chegg (NASDAQ:CHGG). At one point, CHGG stock was up an impressive 60% year-to-date. That was back in late July and early August. Ever since, CHGG stock has come crashing down and presently trades more than 25% off those recent highs.This big selloff is a compelling opportunity for three simple reasons.First, nothing company-specific prompted this selloff. The last news we heard from Chegg was a double beat-and-raise Q2 print which shot the stock to all-time highs in late July. Ever since, we haven't heard anything big -- good or bad -- from the company. Thus, CHGG stock has shed more than 25% on no news.Second, the core fundamentals underlying CHGG stock remain very healthy. The company has created a connected learning platform that is rapidly becoming a necessary learning tool for high school and college students across America. Current growth rates are huge, with 25%-plus revenue growth last quarter and 30% subscriber growth. Margins are powering higher -- gross margins were up nearly 500 basis points last quarter thanks to the software pivot. The opportunity remains large -- only 3 million subs for Chegg, in a 36 million U.S. high school and college student market. Thus, broad strokes, the fundamentals underlying Chegg stock remain very good.Third, the valuation is now attractive. In late July, this stock had a near 60-times forward earnings multiple. Today, that multiple stands narrowly above 30, which is below the application software sector average forward earnings multiple. * 7 Dow Titans Breaking Higher Net net, CHGG stock looks ready to bounce back. This selloff was largely unwarranted, the fundamentals remain good, and the valuation leaves room for multiple expansion powered upside. Adobe (ADBE)Source: r.classen / Shutterstock.com YTD Gain Before Selloff: Over 35%% Off High: 11%Last, but not least, on this list of momentum stocks to buy on the dip is cloud giant Adobe (NASDAQ:ADBE). Adobe stock, which at one point was up more than 35% year-to-date, presently trades about 11% off recent highs. That matches the biggest drop ADBE stock has posted in 2019, and the second-biggest drop over the past three years.In other words, with ADBE stock, you have a winning company in the midst of its second-biggest selloff in three years. That's a compelling set-up to buy the dip.Adobe is a very good company. This company dominates the visual cloud segment, with very little competition. That's a great segment to dominate today. All content is becoming visual -- think streaming TV services, or visual-first social media apps. We live in a world where consumers love to consume visual content, meaning we live in a world where enterprises, advertisers and creative professionals have to create visual content. When those entities create visual content, they do so with Adobe -- and they've been creating more and more visual content than ever before, meaning adoption of Adobe's services is growing rapidly.Just look at Adobe's numbers for proof of this. Revenue growth has been in the double-digit range for a long time, and will remain there for a lot longer, because secular visual consumption trends are far from being over. At the same time, Adobe can get away with price hikes and huge gross margins, because there's hardly any competition in the space. Thus, this is a big margin, big growth company that will ultimately stay on a big profit growth trajectory for a lot longer.What will that result in? A winning trajectory for ADBE stock in the long run. Thus, near-term weakness in ADBE stock is nothing more than a long-term buying opportunity.As of this writing, Luke Lango was long SHOP, OKTA, TTD, PINS, SPLK, CHGG and ADBE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post 7 Momentum Stocks to Buy On the Dip appeared first on InvestorPlace.
Major drug wholesalers and retailers facing a massive lawsuit for allegedly fostering the nation's opioid crisis asked the judge hearing the case to recuse himself on Saturday. The companies argued in a court filing that U.S. District Judge Dan Polster, who is hearing the case in a federal court in Cleveland, Ohio, had made statements in court indicating that he was not impartial in the case and improperly pushed the companies to settle without going to trial. The companies said that Judge Polster had also made improper public comments about the case, including to reporters.
It's a rare moment when a losing call on volatile Rite Aid (NYSE:RAD) makes you a 28% profit. Let me explain: Back on Aug.7, I made a ridiculous statement that buying RAD stock for a short-term bet wasn't as crazy as initial looks might suggest. However, the markets made my bullishness look incredibly foolish very quickly.Source: Ken Wolter / Shutterstock.com Near mid-August, the embattled pharmacy retailer announced an executive shakeup. Former CEO John Standley stepped down from the top post. In his place came Heyward Donigan, who previously served as CEO for Sapphire Digital. During her time leading the company, she led the organization to record growth and consumer engagement.Under ordinary circumstances, Donigan would be a welcome lift to Rite Aid stock. After all, the once-powerful pharmacy retailer has massive competition. We're not just talking about peers, such as CVS Health (NYSE:CVS) or Walgreens Boots Alliance (NASDAQ:WBA). Instead, the RAD stock price is under pressure from disruptive names like Amazon (NASDAQ:AMZN).InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn that context, perhaps the fallout in shares wasn't surprising. When Rite Aid announced Donigan as CEO, the RAD stock price was hovering just above $7. Just a few days later, the equity hit a multi-year low of $5.27. With that, my speculative thesis blew up in my face. * 10 Stocks to Sell in Market-Cursed September But before the rounds of "I told you so's" could flood my inbox, Rite Aid stock started to turn around. From Aug. 27, the equity veritably skyrocketed, gaining nearly 75% to the close of Sept. 10. That made me look less foolish, for which I'm grateful.But what about RAD stock? Is there still an opportunity here after such a mercurial rise? Millennials Hold the Key to the RAD Stock PriceLike most market investments, the answer depends on millennials. As the largest generation in the workforce, this demographic essentially enjoys the China narrative: they're emerging as a true political and economic force, and there are a lot of them.Better yet, millennials bring many potential positives for Rite Aid stock and the broader pharmacy business. For one thing, their sheer numbers bring robust dollars into the mix. More significantly, 45% of millennials prefer using over-the-counter drugs versus depending on a doctor for a prescription.This is one stat for which Donigan and her team must focus on. She has a clear opportunity to convert visitors to sales.And they will come. Based on the Amazon Counter deal that I referenced in last month's story, this will incentivize a new breed of consumers to visit Rite Aid stores. I wrote that "Amazon shoppers are young, tech savvy, and make serious bank." This is exactly the type of demo that you need to get RAD stock out of its funk.Unfortunately, some bad news exists for Rite Aid stock as well. According to MarketingCharts.com, millennials are the most price-sensitive generation for consumer-packaged goods. For instance, millennials more so than any other generation are likely to buy over-the-counter meds on sale as opposed to their preferred brands.Obviously, the easy answer is to pump out some discounts to attract and secure millennial shoppers. But nothing associated with RAD stock is easy. Primarily, the company does not have the margins to play the discount game for a prolonged period.Therefore, Rite Aid stock is a race: can management attract and retain enough millennial shoppers to justify an initial cut to margins? This is not a believable route for many investors, and that's why they dumped shares. Right Now, It's About Tactics Over StrategyGiven the recent and dramatic changes in the RAD stock price, we have several ways to approach shares. First, if you made that 75% profit that I referenced earlier, congratulations! Now, it's time to dump out.Even if you made the smaller 28% profit, it's time to sell. Certainly, you don't want to get greedy with a volatile investment like Rite Aid stock.On the other hand, if you're approaching shares now, I'd wait. For starters, it's unlikely that RAD stock will continue to make double-digit jumps. Second, some stats, like the excessive institutional ownership worries me in this present context. If insiders panic, RAD will plummet faster than you can hit the "sell" button.Third, Rite Aid is scheduled to release their second quarter of fiscal 2020 earnings report near September end. I don't want to have excessive exposure here, especially since RAD stock can go anywhere following this report.But after that dust clears, the pharmacy giant might get interesting again. As I said, it really depends on whether Donigan can convert millennials. It's a herculean task, to be sure. But the opportunity is there, which represents the longer-term speculative case for Rite Aid stock.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post For Rite Aid Stock, Everything Depends on Millennials appeared first on InvestorPlace.
Investors have been avoiding drug store chain Rite Aid (NYSE:RAD) for years. Rite Aid stock was at its heights in 1999 when it started the year at over $1,018. With the current RAD stock price at $7.13 it's hard to imagine just how badly things went wrong for the company.Source: Ken Wolter / Shutterstock.com Even the start of 2017, when RAD stock topped $173, seems like golden days, although the company was still in trouble back then. Since the end of August, RAD put together a rare rally, growing some 38% between August 27 and September 6. It also jumped on the Monday session, up over 15%.Does that mean it's time to consider a RAD investment?InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe consensus is no. And here's why: Rite Aid's Glory Days Are Clearly Well in the PastIn 1995, Rite Aid was the largest American drug store chain by number of locations and second in sales. But it's been downhill since then. By 2017, its prescription revenues gave it just a 3.8% share of the American market. That was a 17.1% drop over the previous year. Rite Aid is still the third largest drug store chain in the U.S. -- the fourth largest if you count Walmart (NYSE:WMT) -- but it's struggling. * 7 Stocks to Buy In a Flat Market The consumer migration toward e-commerce has hit many retailers. Still, Rite Aid has performed particularly poorly at making the online transition. Seeing the writing on the wall, in 2015, the company attempted to negotiate a merger with rival Walgreens (NASDAQ:WBA). Unfortunately, that deal fell apart in 2017.Instead, Walgreens bought 2,186 Rite Aid stores. This gave Rite Aid a $5.2 billion cash infusion but cut its store count in half. And this resulted in RAD stock tanking.Since 2015 when the company floated the idea of a Walgreens merger, the RAD stock price has plummeted 95%.Even if you look at year-to-date performance, Rite Aid is down nearly 50%. The Wall Street Journal's analyst poll has RAD stock firmly in underweight territory. Specifically, three of five analysts recommending investors sell any RAD shares and the other two suggesting they hold.InvestorPlace's Will Ashworth sums it up pretty succinctly:"Unless you're into owning 'cheap trash' stocks that have been mercilessly beaten down over the past few years, RAD stock is not a name I would buy at this point." Don't Expect Q2 Earnings to Lift RAD StockRite Aid is expected to report its second quarter of fiscal 2020 earnings results on September 26. Don't expect a repeat of Q1 -- or at least a complete repeat -- this time around. The company pulled a rabbit out of its hat in June to offset the pounding RAD was taking on results.The last time Rite Aid released an earnings report was on June 26. That was a continuation of the bad news story for investors, and even worse than expected. Revenue of $5.37 billion was down slightly compared to the previous year. However, earnings per share were nowhere near expectations.While analysts had been looking for modest adjusted earnings of 2 cents per share, instead RAD announced an adjusted loss of 14 cents per share. In afterhours trading, the markets hammered Rite Aid stock, dropping over 10%. Amazon Was No Panacea for Rite Aid StockThe following day, Rite Aid stock surged, gaining over 20%. The reason behind the sudden rush to buy RAD was all about Amazon (NASDAQ:AMZN).The day after those brutal Q1 earnings dropped, Amazon announced its new Counter service. This would allow customers to pick up their packages at local retailers: no lockers required, simply walk up to the counter.And the first partner picked by Amazon for the new Counter service was Rite Aid. Customers would be able to pick up Amazon packages at 100 Rite Aid stores at launch. By the end of this year, that number should grow to 1,500.The anticipation that thousands of Amazon customers would be walking into Rite Aid stores -- and quite possibly buying a few things at the struggling retailer while they were there -- temporarily breathed new life into RAD stock. It hit $9.24 in July, marking 30% growth since the day it delivered those terrible Q1 earnings.However, the investor optimism didn't last.Until the rally that started at the end of August, it's been a mostly downward slide for Rite Aid stock. Q2 earnings on September 26 seem unlikely to keep the streak going (assuming it lasts that long).And remember: unlike when the company reported its Q1 earnings, it's very doubtful there's another Amazon-level surprise announcement waiting in the wings.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post Even After Recent Gains Rite Aid Stock Is Still Underweight appeared first on InvestorPlace.
Struggling pharmacy retailer Rite Aid (NYSE:RAD) has shown surprising signs of life recently, as RAD stock has rallied an impressive 40% over the past seven trading days. That's a big rally in a short amount of time. Indeed, it's the biggest seven-day rally RAD stock has staged in the past five years.Source: Ken Wolter / Shutterstock.com Does this recent strength imply that the worst of the secular decline in Rite Aid is over? Is RAD stock finally ready to rebound?I don't think so. It's worth contextualizing this rally. Sure, the stock is coming off its best seven-day stretch in over five years. But, the Rite Aid stock price today is simply where it was a month ago.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, this big rally happened on the heels of a big selloff, and in the big picture, it doesn't look all that significant. It also doesn't help that there isn't much fundamental or optical support for this rally. The valuation remains fairly unattractive without fundamental upside drivers. As such, I think the big seven-day rally in Rite Aid stock is more likely to fizzle out than to persist.To be sure, at some point, Rite Aid stock could become a buy with multi-bagger potential. But at the current moment, that bull thesis lacks clarity. So long as it continues to lack clarity, I think the safest place to hangout here is on the sidelines. Rite Aid Has Secular ChallengesWhen it comes to Rite Aid, I think what you have is the pharmacy version of GameStop (NYSE:GME) or J.C. Penney (NYSE:JCP). That is, just as GameStop and J.C. Penney failed to adapt to digital consumption trends and have subsequently lost relevance in the video game and mall retail worlds, Rite Aid has similarly failed to adapt to digital consumption trends and has subsequently lost relevance in the pharmacy world.The story is pretty simple. E-commerce happened. When e-commerce happened, everything changed. Consumers shifted from physical to digital shopping. Some retailers changed with the times -- in the pharmacy world, see Walgreens (NASDAQ:WBA) and CVS (NYSE:CVS) -- and have since thrived as omni-channel retailers. Both Walgreens and CVS have seen their pharmacy market shares grow from 2010 to 2018. * 7 Stocks to Buy In a Flat Market Other retailers didn't adapt. See Rite Aid, who didn't refresh stores to be tech-savvy or build out a robust e-commerce business. Not surprisingly, Rite Aid's pharmacy market share has dropped from 6.2% in 2010, to 2.6% in 2018, while it has gone from a top three pharmacy retailer in 2010, to being nudged out of the top five by the likes of Walmart (NYSE:WMT) and Kroger (NYSE:KR).The unfortunate reality here is that there isn't much visibility to Rite Aid gaining relevance anytime soon. The balance sheet is cash-strapped and debt-heavy, and cash flows aren't consistently profitable, so the company is operating with two hands tied behind its back for the foreseeable future -- meaning that store refreshes and e-commerce expansion aren't coming soon.In other words, Rite Aid has secular challenges that aren't going away any time soon. Until they do, it's tough to see Rite Aid stock rallying in a meaningful way from here, especially considering the stock trades at a not-that-cheap 7-times forward EBITDA multiple. Rite Aid Stock Could Turnaround … But Not YetAs I've argued before, Rite Aid stock could turnaround in the event that its distribution partnership with Amazon (NASDAQ:AMZN) introduces Rite Aid to a new and valuable shopper demographic.The thesis here is simple. Rite Aid shoppers skew old and poor. Amazon shoppers skew young and rich. Amazon's new partnership with Rite Aid will inevitably bring some Amazon shoppers through Rite Aid's doors. Most of those shoppers probably haven't been inside a Rite Aid store in ages, if ever.Most will probably look at the outdated stores, be uninterested, pick up their Amazon.com order, and promptly leave. Some may actually like what they see when go into Rite Aid, meaning some of these new, young and rich shoppers may actually start shopping at Rite Aid stores somewhat regularly.That will provide a meaningful lift for Rite Aid's sales, and this lift should last for several years.All in all, the Amazon partnership gives Rite Aid a unique opportunity to win over a demographic that has long forgotten about Rite Aid. If the company appropriately capitalizes on this opportunity, RAD stock could turn into a multi-bagger from here.But, we don't know if that will happen. Until the data suggests that this is indeed happening, the turnaround thesis in RAD stock will lack conviction and clarity. Bottom Line on RAD StockAt the current moment, there are two ways to look at the price action in RAD stock. One, Rite Aid stock is coming off its best seven-day stretch in over five years, and is ready to turnaround. Two, Rite Aid stock is exactly where it was a month ago, and is stuck in a secular downtrend.I think the latter perspective holds more credibility and has more support. As such, for the foreseeable future, I think it is best to avoid RAD stock.As of this writing, Luke Lango did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post It's Still Too Risky to Bet on Rite Aid Stock appeared first on InvestorPlace.
The U.S. judge overseeing nationwide litigation concerning the opioid crisis on Monday rejected Purdue Pharma LP's effort to dismiss claims that its activities caused a public nuisance. U.S. District Judge Dan Polster in Cleveland said a reasonable jury could conclude that Purdue's alleged fraudulent marketing of opioids, for the purpose of increasing sales, caused a nuisance. Polster's decision came six weeks before the scheduled Oct. 21 trial on the impact of opioids on two Ohio counties.
Rite Aid Corporation (RAD) said today that it will release financial results for its Fiscal 2020 Second Quarter, which ended Aug. 31, 2019, on Thursday, Sept. 26, 2019. The company will hold an analyst call at 8:30 a.m. Eastern Time with remarks by Rite Aid's management team. The telephone replay will be available beginning at 12 p.m. Eastern Time on Thursday, Sept. 26, 2019 and ending at 11:59 p.m. Eastern Time on, Sept. 29, 2019.
If you take a glance at the chart of Rite Aid (NYSE:RAD) stock, it is mostly downhill -- going from $15 to $6.60. But this is nothing new. Keep in mind that, during the past 15 years, the RAD stock price has seen an average decline of nearly 16% annually!Source: Shutterstock Okay then, might there be a contrarian play here? Or should investors just throw in the towel? Is there really no hope here? * 7 Triple Threat Growth Stocks to Buy for the Long Term Well, with RAD stock in single digits -- and the sentiment at awful levels -- there does seem like there could be value for a speculative play. Let's face it, the company has some valuable assets and advantages, such as:InvestorPlace - Stock Market News, Stock Advice & Trading Tips * Rite Aid has a well-known brand that's been around since the 1960s. * The company has about 2,500 stores across 19 states, making it the third largest pharmacy chain in the U.S. * RAD serves 8.2 million customers per week and has a wellness+loyalty program of over 13 million members. * The company has its own full service PBM, called EnvisionRxOptions (it aggregates roughly 20 million lives across all businesses).Not too bad, right? I agree. But hey, is all this still enough? Note that the company has some serious challenges.For example, RAD does not have much scale or breadth to be a next-generation pharmacy business. The debt load is $6.4 billion and the market cap is a mere $363 million. In other words, RAD lacks the resources to become something like CVS (NYSE:CVS), which has a growing base of clinics as well as a massive insurance business.Of course, RAD stock also suffers from the secular trend towards e-commerce. The fact is that online platforms from companies like Amazon.com (NASDAQ:AMZN) and Walmart (NYSE:WMT) are eating up market share. In fact, the real fear is that RAD may ultimately become the next Sears (OTCMKTS:SHLDQ). Future Catalysts for RAD StockNow there are some potential catalysts for RAD stock.First of all, the company recently brought in a new CEO, Heyward Donigan, who has worked in the healthcare industry for over 30 years. Before coming on board RAD, she was the CEO of Sapphire Digital, an e-commerce site that analyzes health plans. She has also held executive positions at companies like ValueOptions (a behavioral health improvement company), Premera Blue Cross and Cigna Healthcare (NYSE:CI). All in all, Donigan has broad experience in both traditional and digital healthcare -- which seems to be the right skillsets for RAD.Next, the company has entered a strategic agreement with Adobe (NASDAQ:ADBE) to create more personalized digital experiences, such as with content creation, marketing, analytics and commerce. The goal is to develop a seamless omni-channel platform.Although, perhaps the most important deal is with AMZN, which involves using Rite Aid stores as pick-up points for packages. By the end of this year, the expectation is to have more than 1,500 Amazon Counter locations.This is likely to help drive up traffic. RAD's demographics generally skew older compared to Amazon's. What's more, a similar type of deal with Kohl's (NYSE:KSS) resulted in a 9% increase in foot traffic and an 8% jump in revenues.But the RAD/AMZN arrangement may just be a warmup. If there is traction, it seems reasonable for partnering on digital integration. And yes, AMZN may just ultimately buy out the company to quickly rollout a pharmacy footprint. * 7 Industrial Stocks to Buy for a Strong U.S. Economy Bottom Line on the RAD Stock PriceAgain, RAD stock has some deep issues, which will take time to deal with. But at the same time, the company still has value -- which the AMZN deal validates -- and management is making smart movies with its digital strategy. So as a speculative play, RAD stock does look interesting right now.Tom Taulli is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Deeply Discounted Energy Stocks to Buy * 7 Stocks to Buy In a Flat Market * 10 Stocks to Buy to Ride China's Emerging Wealth The post With 3 New Growth Catalysts, Is Rite Aid Stock Finally a Buy? appeared first on InvestorPlace.
A U.S. judge on Tuesday rejected efforts by major drugmakers, pharmacies and distributors to dismiss claims that they caused the nation's opioid crisis, clearing the way for a scheduled landmark trial even as he pushes for a nationwide settlement. U.S. District Judge Dan Polster, who oversees roughly 2,000 opioid lawsuits by states, counties and cities, said the plaintiffs can try to prove that drugmakers' deceptive marketing of the painkillers caused a harmful, massive increase in supply that pharmacies and distributors did not do enough to stop.
Approximately 21 years ago, Rite Aid (NYSE: RAD) traded for over $800. Today, RAD stock is down 59% year-to-date through August 29 and trading below $6.Source: Shutterstock In my most recent article about Rite Aid, Investors Shouldn't Gamble on Rite Aid Stock, I suggested that "unless you were into owning 'cheap trash' stocks that have been mercilessly beaten down over the past few years, RAD stock is not a name I would buy at this point."At the time of the article in late July, the RAD stock price was around $6.56. Since then, it dropped all the way to $5.04 before rebounding slightly.InvestorPlace - Stock Market News, Stock Advice & Trading TipsYes, Rite Aid hired Heyward Donigan as their new CEO. She replaces the outgoing John Standley, who led the drug store chain for nine years. However, this executive shift does nothing to change my opinion of Rite Aid stock. * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off As Charlie Sheen's character Bud Fox would say in Wall Street, "It's a dog with fleas."However, when I noticed that my InvestorPlace colleague David Moadel recently went contrarian by suggesting Rite Aid stock, although risky, could pay off in the future, I just had to revisit this $300-million market capitalization investment.Could RAD stock be the best security available under $6? Why don't we have a look? What Else Is There?I did a quick screen of stocks trading on the New York Stock Exchange with market caps greater than $300 million and trading between $1 and $6. I came up with a list of 90. Rite Aid happened to be the second-smallest stock by market cap ahead of only Anworth Mortgage Asset (NYSE:ANH).Who is the largest market cap trading between $1 and $6?It is Canadian oil and gas producer Encana (NYSE:ECA) at $6.1 billion. Encana once traded above $34 as recently as 2011. However, the oil and gas business hasn't been a peach these last few years.As I write this, it is trading under $4.50, down 25% YTD.However, it released its second quarter of 2019 results in July, and they were better than expected.The company's total revenues were $2.06 billion, well ahead of the $1.73 billion consensus estimate. It was also much improved from $983 million a year earlier. On the bottom line, it had adjusted earnings of $290 million, 46% higher than a year earlier.Encana's Q2 2019 production was 591,800 barrels of oil equivalent per day (BOE/d) compared to 533,200 a year earlier. More importantly, Encana has transitioned to focusing on crude oil rather than natural gas. Oil now accounts for 55% of its production with natural gas accounting for the rest. A few years ago, natural gas was at 95% of its production.The oil industry might be in a downer right now. But from where I sit, ECA shares have to be more attractive to investors than Rite Aid stock.As I scroll through the rest of the list, I've come up with at least five other options that are good alternatives to Rite Aid: Kinross Gold (NYSE:KGC), Aurora Cannabis (NYSE:ACB), Hexo (NYSE:HEXO), Pitney Bowes (NYSE:PBI) and BBX Capital (NYSE:BBX).Unlike Encana, several of these stocks are losing money but provide greater potential upside than RAD stock, with the same amount of risk. The Bottom Line on RAD StockDavid Moadel sees the Amazon (NASDAQ:AMZN) deal to put package pickup locations in 1,500 Rite Aid stores by the end of 2019 as a real benefit to the company. Given early evidence suggests that Kohl's (NYSE:KSS) is benefiting from its relationship with Amazon, it's possible that Rite Aid will experience the same goodwill.However, when there are other potential investments under $6 to consider, why bother? At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off * 7 'Strong Buy' Stocks to Beat Volatility * 7 Mega-Cap Tech Stocks on a Rebound Now The post Is Rite Aid Stock the Best Play Under $6? appeared first on InvestorPlace.
I can almost hear the groans now. Any mention of Rite Aid (NYSE:RAD) stock is sure to elicit eye rolls and sarcasm from the peanut gallery on social media. On one level, I can understand where they're coming from. This is, after all, a stock that's slid from $180 to $5 and change, with penny-stock status a real threat in the near term.Source: Ken Wolter / Shutterstock.com If you've read my previous InvestorPlace articles, though, you'll know by now that I eat criticism for breakfast and derision for lunch. In this vein, I'm going to lay out the bullish argument for RAD stock. Just remember to take everything written here with a grain of salt and a truckload of caution, for Ride Aid stock is far from a sure bet. New CEO Means New Hope for RAD StockIf any event has indicated a change in direction for this ailing drug store, it's the departure of Chief Executive Officer John Standley, who is widely blamed for the failure of two attempted mergers as well as the precipitous decline in the RAD stock price. Over the past two years, Rite Aid has sold many of the company's stores to competitor Walgreens (NASDAQ:WBA).InvestorPlace - Stock Market News, Stock Advice & Trading TipsToday, the store count for Rite Aid is approximately half of what it was just a couple of years ago. In fact, with just 2,466 stores spread across 18 U.S. states, Rite Aid's fiscal year 2019 revenues amounted to a comparatively paltry $21 billion. * 7 "Boring" Stocks With Exciting Prospects And so, Standley is now the Jeff Immelt of the drugstore industry. Long-term RAD stock investors are happy to say "good riddance" to the outgoing CEO. Taking his place is renowned healthcare executive Heyward Donigan, who has served as the CEO of ValueOptions and Sapphire Digital and in various executive positions at Cigna (NYSE:CI) and Premera Blue Cross.Rite Aid Board of Directors Chairman Bruce Bodaken was effusive with accolades for the company's new CEO:We are confident that Heyward is the right person to lead the company in capitalizing on the opportunities in the evolving healthcare environment. Heyward's strong senior executive experience, proven leadership capabilities and consistent track record of driving profitable growth, as well as her broad healthcare knowledge and digital shopping technology expertise set her apart.Personally, I'm hopeful that much like at General Electric (NYSE:GE), a "draining of the swamp" at the executive level will mark a new chapter in Rite Aid's rocky history. Granted, shareholders haven't seen a markup in Rite Aid stock quite yet, but change takes time. And at the current valuation, it's hard to imagine that there's much more room for this embattled stock to fall. The (Delayed) Amazon EffectOnline retail leviathan Amazon (NASDAQ:AMZN) has been known to bestow its Midas touch to struggling companies before, and I'm hoping that it can be Rite Aid's savior in 2019. When Amazon announced in late June its plan to allow customers to pick up delivered packages at Rite Aid locations, the RAD stock price increased but not for very long, leaving investors wondering whether the Amazon effect would have a lasting positive impact on Rite Aid shares.In light of the actual terms of the agreement, I would advise shareholders to exercise patience. As has been reported, the package pickup service was to commence at only 100 Rite Aid locations, but is then to be expanded to 1,500 locations by the end of this year. I expect the partnership to drive sales and revenues to Rite Aid as more stores offer the package pickup service. My Takeaway on Rite Aid StockAfter suffering more capital loss than anyone should experience in the span of a few years, RAD stock investors are ready for the company to turn the corner. Will it happen in 2019? Heaven only knows. Between the swamp draining and the Amazon kick-starter, I'm hoping the market will indeed make Rite Aid great again.As of this writing, David Moadel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 "Boring" Stocks With Exciting Prospects * 15 Cybersecurity Stocks to Watch as the Industry Heats Up * 5 Healthcare Stocks to Buy for Healthy Dividends The post Rite Aid Stock Is Risky but Could Pay Off appeared first on InvestorPlace.
In recent years, Rite Aid (NYSE:RAD) stock has done little more than fight to survive. The Camp Hill, Pennsylvania-based pharmacy chain has long struggled against its peers and has failed at multiple attempts to sell itself to a competitor. This resulted in shareholders approving a 1-20 reverse stock split in April to avoid delisting. However, this did little to stem the tide.Source: Shutterstock The company temporarily boosted optimism when it joined the Amazon (NASDAQ:AMZN) delivery network. However, excitement over the deal quickly faded. Plus, a change in the CEO position has failed to stem the drop in the RAD stock price. Without a deeper partnership with Amazon, I see little reason to buy Rite Aid stock. Amazon Deal Brought Only Temporary ReliefThe Amazon deal initially sparked hope as it would increase foot traffic into Rite Aid stores. There's some logic to this argument. As our own Will Ashworth argues, the Amazon return program at Kohl's (NYSE:KSS) led to a 9% rise in foot traffic and an 8% revenue increase in stores which supported the return program. But will that be enough?InvestorPlace - Stock Market News, Stock Advice & Trading TipsI think some also hope this will lead to an Amazon purchase of Rite Aid itself. Such optimism has brought disappointment before. An attempt by Walgreens Boots Alliance (NASDAQ:WBA) to take over the company led instead to the sale of 1,932 Rite Aid stores to the pharmacy chain. Albertsons also tried to buy Rite Aid. This proposed union also fell through after RAD shareholders balked. * 10 Marijuana Stocks That Could See 100% Gains, If Not More Moreover, the Amazon deal failed to cure the ills of Rite Aid stock. Within a month, RAD stock had fallen to levels it saw before the Amazon announcement. Also, the recent ascendancy of Heyward Donigan to the CEO position has not stemmed the decline. Rite Aid Can No Longer CompeteAs a result, the RAD stock price now stands at about $5.60 per share. Certainly, Amazon and online sales have changed the dynamics of the pharmacy business for Rite Aid and its peers. Standalone pharmacies have long dealt with competition from both grocers and major retailers.Now with the threat of online competitors, margins feel more pressure than ever. This probably explains some of the reasons why CVS (NYSE:CVS) entered the insurance business and built in-house clinics.Rite Aid cannot follow suit. Just as the company needs to make significant changes to survive, RAD finds itself with both falling revenue and profits. Unfortunately, as a $300 million company with $6.4 billion in long-term debt, it has no financial room for such a pivot.Put simply, RAD stock has become the Sears Holdings (OTCMKTS:SHLDQ) or the JCPenney (NYSE:JCP) of pharmacies. Rite Aid has evolved into the type of business that consumers do not need in today's world.The fact that its typical customer is over 55 and earns under $40,000 per year does not bode well for its future. Moreover, competition forces it to sell what it does offer at thin margins. Unless and until Amazon or another major online retailer can make Rite Aid relevant, I see a dim future for RAD stock. The Bottom Line on RAD StockOnly a deeper partnership with Amazon can save Rite Aid. The changing retail pharmacy landscape has fundamentally changed Rite Aid's business. Unlike Walgreens and CVS, it lacks the necessary resources to improve its business and remain relevant. Debts remain too high, and numerous suitors have passed on what remains of Rite Aid.If results at Kohl's serve as an indication, Rite Aid stores will see more foot traffic and revenue. However, this does not change the fact that consumers can find anything Rite Aid offers elsewhere and probably at a lower price.If Amazon took over the stores entirely, perhaps the company could still play a significant role in today's pharmacy business. Barring that scenario, the time has come to think of Rite Aid stock as the next Sears.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks That Could See 100% Gains, If Not More * 11 Stocks Under $10 to Buy Now * 6 China Stocks to Buy on the Dip The post Rite Aid Stock Continues to Fade into Irrelevance Despite Amazon appeared first on InvestorPlace.
One of my favorite things to do in the market is buy the dip in beaten up and undervalued stocks, but, only when doing so makes sense. When it comes, the reality is that buying the dip in Rite Aid (NYSE:RAD) simply doesn't make sense right now. Rite Aid has a long way to go.Source: Shutterstock The fundamentals are broken. The chart is broken. Investor sentiment is dour. There has been C-suite turnover. And, above all else, the outlook for a turnaround remains as bleak today, as it's ever been.As such, the most likely path forward for Rite Aid is lower revenues, lower profits, lower margins, and a lower stock price.InvestorPlace - Stock Market News, Stock Advice & Trading TipsTo be sure, there is a pathway here through a unique Amazon (NASDAQ:AMZN) partnership wherein RAD stock turns into a multi-bagger from current levels. But, that pathway lacks visibility and tangibility here and now. Until that pathway gains visibility and tangibility, Rite Aid stock isn't worth the risk. * 10 Cheap Dividend Stocks to Load Up On As such, the investment implication with RAD stock is crystal clear. First, sell now and stay away for the foreseeable future. Second, monitor the company and see if the Amazon catalyst does boost the numbers next quarter. Third, if it does, buy into the rebound. If it doesn't, continue to stay away until it does (if ever). Stay Away From Rite Aid Stock For NowThe big picture reality here is that Rite Aid is a broken company with very dour go-forward growth prospects.At one point in time, Rite Aid was a large pharmacy plus convenience store with a wide reach and busy stores. That was before the ecommerce era. Now, consumers can basically get everything they got at a Rite Aid 20 years ago, from Amazon, Walmart (NYSE:WMT), or CVS (NYSE:CVS) today, without ever having to leave their homes and probably at lower prices, too.Even further, because Rite Aid has struggled significantly over the past several years, the company has been left consistently cash-strapped. That means the company hasn't put as much money back into its stores or operations as peers.The result? Two-fold. One, Rite Aid's stores often look outdated next to Walmart or Target (NYSE:TGT) stores, which now have self check-out kiosks. Two, Rite Aid's e-commerce business isn't as built out as peer e-commerce businesses.As such, Rite Aid is the laggard in the pharmacy retail world today. Given its lack of resources, Rite Aid stock projects as the laggard for the foreseeable future, too. That means revenues will keep dropping. Margins will suffer from that loss of revenue scale. Profits will consequently drop more.As go profits, so go stocks. Thus, so long as this profit erosion trend remains in place, RAD stock will likely continue to slide lower. The Amazon Catalyst and Rite Aid StockThe bull thesis on RAD stock centers around a recent partnership with Amazon sparking a reversal in the current profit erosion trend at Rite Aid.This could happen. Rite Aid recently became a "fulfillment center" of sorts in Amazon's rapidly expanding distribution. That means Amazon customers can now pick up their Amazon.com orders in Rite Aid stores, which further means that Amazon customers will start going into Rite Aid stores.That's big, mostly because Amazon.com shoppers don't typically go into Rite Aid stores. Rite Aid's core shopper base is 55 & up and makes less than $40,000 a year. Amazon.com shoppers, on the other hand, skew young and rich aka, not Rite Aid shoppers.Most of these Amazon.com shoppers will likely walk into a Rite Aid store, say why would I ever shop here, pick-up their Amazon.com orders, and promptly leave. But, some of them could stick. That is, some will walk in, see something they like in the Rite Aid store (maybe Thrifty ice cream) and start shopping at Ride Aid with greater frequency.That's a long-running tailwind. Those Amazon.com shoppers are young, and their purchasing power is only going up. Thus, if some of those shoppers start shopping at Rite Aid in greater frequency, Rite Aid's revenues, margins, and profits will set out on a secular, multi-year uptrend.If that happens, RAD stock could be a multi-bagger from current levels, but, that's a big "if." As such, investors are best to wait for confirmation that this is happening, before taking a bet on a stock that has been a falling knife for several years. Bottom Line on Rite Aid StockI don't think all hope is lost for Rite Aid stock. Instead, I do think that the Amazon partnership could spark a huge fundamental trend reversal which ultimately causes RAD stock to double or triple from current levels.But, I also peg the likelihood of that reversal materializing at "very low." As such, the best thing to do here is to sell RAD stock and stay away until the numbers confirm that the Amazon partnership is providing a meaningful boost to Rite Aid's numbers.As of this writing, Luke Lango was long AMZN, WMT, CVS, and TGT. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Don't Count on Amazon to Save Rite Aid Stock Just Yet appeared first on InvestorPlace.
News that struggling drugstore chain Rite Aid (NYSE:RAD) has selected a new CEO wasn't the change shareholders were hoping for, if the recent RAD stock price plunge is any indication. Shares have fallen more than 20% since the 12th of August, when the company announced Heyward Donigan would be replacing John Standley as CEO, effective immediately.Source: Shutterstock Of course, poor performance may have been in the cards anyway. Rite Aid stock has been losing ground since the beginning of 2017, when Walgreens Boots Alliance (NASDAQ:WBA) first started to waffle on its plans to acquire the struggling company. By early 2018, the deal was pared back to only 1932 stores, and a price tag of only $3.6 billion.It's not enough cash for the company, now only 2500 stores strong, to buy its way out of the trouble it found itself in a few years back. Thank the competition from bigger CVS Health (NYSE:CVS) as well as Walgreens for that.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks Under $5 to Buy for Fall New leadership sometimes breathes new life into an old company though. In that light, Donigan's placement may well mark a turning point for Rite Aid, and by extension, for RAD stock.On the other hand, the crux of Rite Aid's woes aren't particularly elusive. The company lacks the scale Walgreens and CVS Health now enjoy, further exacerbating the fact that the drugstore chain has to spend too much for too little. Rite Aid Needs to Think BiggerIt's not from a lack of trying that Rite Aid has been unable to dig its way out of trouble. If nothing else, it has willingly been creative.Case in point: In June, it allowed Amazon (NASDAQ:AMZN) to establish parcel pickup lockers in 100 stores, with plans to offer online shopping deliveries at 1500 stores by the end of the year. That added foot traffic might lead more consumers into Rite Aid stores, where they just might make a separate purchase. The company is also testing telehealth options.The growth prospects of such initiatives are modest. Amazon's package pickup program may only draw a handful of additional consumers into any given store on any given day. Meanwhile, CVS plans to open actual medical clinics within 1500 of its 6200 stores by 2021 … an arguably better option than a virtual doctor's visit.Ergo, Rite Aid's biggest problem -- the aforementioned lack of scale -- remains a big problem. That is, it's not selling enough goods at the right price to adequately pay its bills. Selling stores to rival Walgreens rather than fixing those locales may have ultimately worsened the problem.Quantitative information affirms the qualitative idea. RAD Stock by the NumbersIt's curious. On a gross margin basis, Rite Aid outperforms or at least mirrors its rival pharmacy chains. In other words, the difference between its cost of merchandise and its retail price of that merchandise sold is as it should be.Where Rite Aid falls oddly short is in span between the income statement's gross profit figure and its EBITDA (earnings before interest, taxed and depreciation) figure. The pharmacy chain is only converting about half the revenue into earnings that its chief rivals are. The company's EBITDA rate, as a percentage of sales, are consistently less than half.There's only one key line between those two numbers on an income statement, by the way … selling and general/administrative expenses. Rite Aid's are considerably more than CVS Health's, and notably higher than Walgreens'. While the differences may look and feel modest for other types of industries, in the retailing arena where margins tend to be thin, the differentials are significant.Donigan's first task may be simply to figure out where that SG&A money is going.Some cost-cutting on that front may be able to restore an ever-shrinking cash flow that has limited the company's capacity to invest in its own growth. In fact, after years of steady declines, the company's operating cash flow has turned negative as of 2019. Bottom Line for RAD StockEasier said than done, to be fair. Some expenses are static and don't scale. Advertising expenses, for instance, cost from one organization to another regardless of how many stores are benefitting from those ads.Also bear in mind that Rite Aid operates a pharmacy benefits management outfit, and CVS is now teamed up with health insurer Aetna. The margin profiles described above aren't perfect apples-to-apples comparisons.These companies are akin enough to take note of the surprisingly wide scope of EBITDA margin and administration spending disparities. They're more alike than different and the numbers should be closer together.Only time will tell if patient owners of RAD stock will eventually be rewarded for that patience, just as only time will tell if Heyward Donigan will accept the fact that her company is smaller than its rivals, and must adjust accordingly where she can.There's little doubt, however, as to where and how Rite Aid is missing an opportunity. And the RAD stock price rebound may struggle to last until costs are curbed, even if culling those costs makes things tough.As of the time of this writing, James Brumley did not hold a position in any of the aforementioned securities. To learn more about James, visit his site at jamesbrumley.com, or follow him on twitter at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post New Rite Aid CEO Needs More Than Amazon Partnership to Drive RAD Stock Higher appeared first on InvestorPlace.
Rite Aid (RAD) announced today that seasonal flu shots are available at all 2,466 Rite Aid pharmacies. Patients can get ahead of the lengthy flu season by visiting any Rite Aid to receive a flu shot from one of the company’s more than 6,300 certified immunizing pharmacists, subject to state regulations. “Although last year’s flu season was less severe than the year before, it was the longest in 10 years.
Piper Jaffray initiates CV Sciences with an overweight rating and a price target that reflects an upside of more than 60%. CV Sciences CEO Joe Dowling joins Yahoo Finance's Zack Guzman and Sibile Marcellus, along with Carleton English, New York Post Hedge Fund Reporter, to discuss.