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3 Reasons CVS Offers Healthy Growth

Oct. 08, 2019 1:33 PM ETCVS Health Corporation (CVS)22 Comments
Michael Henage profile picture
Michael Henage


  • Though CVS's acquisitions get a lot of press, the company's stores are a focus for good reason.
  • ExtraCare or CarePass, whatever you call it, loyalty programs from CVS should drive better sales in the future.
  • Given the growing health and wellness industry, it's hard to imagine that CVS won't continue to outperform expectations.

CVS Health (NYSE: CVS) has merged its way from being a retail pharmacy chain to a vertically integrated health provider. With any acquisition, there are going to be investors who question the company’s strategy. Despite CVS’s goal of growing its size and capabilities, the market hasn’t rewarded its efforts. In the last five years, the stock has been essentially cut in half. What shouldn’t surprise anyone, is there are no shortage of law firms reminding shareholders that they are more than happy to sue CVS into oblivion. Even with this negative news hounding the company, there are three solid reasons to believe CVS can offer healthy growth in the future.

A massive company needs a massive market

Before we get into how CVS might offer growth in the future, it first makes sense to look at the size of the market opportunity. According to the Global Wellness Institute, the wellness industry “is approaching $4.2 trillion globally.” Given that CVS is looking to broaden its reach beyond prescriptions into whole health care, this massive market is exactly what the proverbial doctor ordered.

Global wellness market

(Source: Global Wellness Institute Press Room)

Inside of the wellness industry, beauty, personal care and nutrition alone generate an estimated $1.8 trillion of these sales. As we will see later, there is a huge reason for CVS to reward shoppers for buying these products in the stores or online.

When it comes to CVS’s traditional pharmacy business, the U.S. pharmacy and drug store business is expected to exceed $300 billion this year alone. This industry is expected to grow by about 3% per year after posting similar growth over the last five years. The good news for CVS is according to Kevin Hourican, President of CVS Pharmacy, “we’re growing at 2x the market.” Investors should consider the implications of this comment

This article was written by

Michael Henage profile picture
I've been investing for over 20 years and have written over 1,300 articles about investing and stock analysis. I'm a tech nerd and a completely obsessed NFL fan.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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