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When investing, it's usually smart to buy the market leader. This ensures that the company will be around and can hopefully fight off smaller competitors. However, in the pharmacy industry, I believe that Rite Aid (RAD) offers the best investment opportunity.

Rite Aid competes against CVS (CVS) and Walgreen's (WAG) in the competitive retail market. Rite Aid has a strong presence on both the east coast and west coast, but unlike its rivals does not have stores in the middle of the United States.

Fourth quarter earnings have sent Rite Aid shares to yearly highs, but the run isn't about to stop anytime soon for this "penny stock". Fourth quarter revenue came in at $6.5 billion. Full year revenue hit $25.4 billion, marking a 9.7% decrease. Same store sales declined 2.0% for the full year.

Rite Aid has slowed expansion and continues to update stores and close underperforming stores. In fiscal 2013, Rite Aid remodeled 112 stores, relocated 4, and closed 10 stores. The company ended the fiscal year with 4623 stores.

In my last article on Rite Aid, I highlighted the expansion of Now Clinic Online as a reason to buy shares. After the test in nine Detroit stores, Rite Aid announced its expansion into an additional 58 stores in Baltimore, Boston, Philadelphia, and Pittsburgh. The Now Clinic Online offers free consultations with nurses. Customers have the chance to talk to an online doctor for 10 minutes at a cost of $45.

The big reason to invest in Rite Aid now is its profitability. For the full year, Rite Aid expects revenue to hit in a range of $24.9 to $25.3 billion. Analysts on Yahoo Finance are projecting revenue of $25.17 billion. Rite Aid sees earnings per share hitting $0.04 to $0.20. Analysts expect to see $0.04 in profits. If Rite Aid can post earnings closer to the high end of that range, shares will once again see huge gains. In fact, if Rite Aid can post earnings per share of $0.20, shares would actually trade at only 11.6x this year's earnings.

Going forward, analysts on Yahoo Finance expect earnings per share to hit $0.11 in fiscal 2015. However, if Rite Aid turns in a higher profit than the $0.04 in 2014, expect these estimates to increase from analysts. Revenue is expected to hit $25.4 billion in fiscal 2015. This would mark an increase to the expected 2014 numbers.

I see Rite Aid surprising analysts in fiscal 2014. The expansion of the wellness centers and online doctor consultations provides additional revenue and should help same store sales. The expansion could also see more customers choosing Rite Aid locations over rivals CVS and Walgreen's.

Back in March, I called $1.67 a good entry point for Rite Aid. Shares are up 38% since that time thanks to fourth quarter earnings. This is a stock that could be trading much higher by the end of the year. Rite Aid could easily double from here in a couple of years.

Source: Rite Aid: The Retail Stock Under $5 You Should Buy