Shlomo Wiesen's  Instablog

Shlomo Wiesen
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My specialty is the hi tech sector- I work as an analyst in search engine optimization, so I have an acute understanding of some of the biggest companies in the world, all of whom use search technology in some way, shape, or form (Google, Microsoft, Apple, Twitter, Amazon, Facebook, & Yahoo).
My company:
Kahena Digital Marketing
  • Rite Aid Will Catch The Flu Bounce 1 comment
    Dec 5, 2012 4:09 PM | about stocks: RAD, WBA, CVS

    Last year, flu season began in February. This year it has already started, which makes it the earliest start to the flu season in over 9 years.

    According to the Centers for Disease Control and Prevention, this year's flu season could be one of the worst.

    With this early flu outbreak conveniently starting during National Influenza Vaccination Week, Rite Aid (NYSE:RAD) already has an attractive offer: From now until December 15th, flu shots are available in Rite Aids for $24.99.

    The flu shot costs $32 at CVS (NYSE:CVS), and Walgreens' (WAG) website ominously doesn't state the price. A phone call to one of their pharmacies revealed the price to be $32 as well. Looks like Rite Aid picked the right flu season to slash their price.

    Much like the swine flu furor sent biotechs soaring, a mild flu fervor can send pharmacy stocks higher, in a kneejerk sort of way. Though this flue season will be nothing like the swine flu outbreak, a furor is still a furor. Rite Aid might not go up 300% like some biotechs did during the swine flu outbreak, but at a dollar a share, I am confident that a 10-20% gain could happen rather quickly.

    And as an aside to the flu boost, Rite Aid itself is not necessarily the doom and gloom company that many are portraying it as. Sure, they have pretty much lost out to big brothers CVS and Walgreens, but a bottom seems to have been hit, and the future might not be as bleak. This past quarter showed gross margin actually rising 1%, and front end sales rose 1.4%. Granted, pharmacy sales declined .7%, but with a potential flu vaccine boom coming ahead, that could change next quarter.

    A company with $26 billion in yearly revenue and $6.8 billion in profit last year seems like it could hang on a lot longer than its $1 share price would indicate. Granted, the $6.2 billion debt isn't necessarily pretty, but between being a potential buyout target to a kneejerk bounce from a likely flu outbreak furor, I like Rite Aid for the next few weeks.

    Disclosure: I am long RAD.

    Additional disclosure: I may initiate a long position in CVS in the coming days

    Stocks: RAD, WBA, CVS
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    Author’s reply » 50% growth since i wrote this....maybe time to sell?
    7 Feb 2013, 03:18 AM Reply Like
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