Three Reasons to Hold Walgreen Long Term

I took the opportunity Thursday to lower my Adjusted Cost Base [ACB] on U.S. drugstore chain, Walgreen Company (WAG). Long time readers of the moneygardener have likely read posts about my accumulating shares of WAG over the past year. Thursday's purchase was just another wrung on the ladder, decreasing the overall cost of my equity stake in Walgreen.

The thesis behind holding shares in Walgreen long term is simple:

• America is getting older in a big way, with this comes the need for drugs and convenience
• Walgreen has a history of strong growth and dominates the market along with CVS Caremark (CVS) (Walgreen currently trades at a P/E of 17x while CVS changes hands for 21x)
• The Canadian dollar is nearly at par; U.S. retail sales sentiment is extremely low...

Comments

[Walt17:]

Have you shopped at Walgreen recently? A few weeks ago I received a coupon for 30% off. I went to Walgreen, looked around, and left without buying anything. They had nothing I wanted that I couldn't get cheaper elsewhere. Even with a 30% discount they were overpriced. I realize that probably isn't true on all of their merchandise. But it does indicate they have a pricing problem.

Compared to CVS they may be better. But they can't compete with WalMart. Some of their products are cheaper at my local grocery store. In my opinion, Walgreen's growth potential is limited is limited to those areas where the competition is limited.

2008 Apr 18 08:14 AM

[Jake2:]

Zero content.

2008 Apr 18 05:08 PM

[Harvey P. S...:]

Walgreens in northern Illinois don't try to compete with Wal- Mart, in this area. Walgreens , I believe is a convenience type of store . Small stand alone property, usually in high traffic areas near residential homes , to make a quick stop to pick up one or two items. Also I 'am a significant Walgreens shareholder for many years after they started building many stores all around the U. S.. As far as prices go , look for there sales flyer, coupons shop wisely. My last thought Americans are getting lazy, they want convenience. Also with gasoline well over $ 3.00 a gallon , a short trip of a mile to Walgreens to pick what you really need , sure beats 8 miles to the Mega Mart.

2008 Apr 18 05:10 PM

[deaverb:]

Walgreen is a convenient place to shop and more competitive than almost any other small footprint store. They also personalize by area (in Ft. Lauderdale, near the beach, with condo/hotel suite rentals, they stock up on a simple gondola of food--at great prices--no, not Dollar Store or Wal-Mart--but good). Well run; loyal to employees; with a long term perspective. Always a good buy.

2008 Apr 18 06:57 PM

[globalmacro:]

Everyone is all hot over Target. What do you think about Target?

2008 Apr 19 03:46 AM