In focus: Rite Aid

One of the trends that is due to make a return is health care. This would increase business for Walgreen's, CVS, and ...Rite Aid. Rite Aid's stock, RAD, has been dismantled for some time by many earnings misses. 52-week high, $1.50, 5 year high $6.50, 10 year high $9. Closing price 4/6/2011 was $1.06. It fell to as low as $.22. There's no doubt this company has been the victim of being the underdog to Walgreen's, Target, and various discount pharmacies. However, Rite Aid is beginning to stabilize and looking for growth opportunity. Guidance was not only inline, sales are foretasted to overshoot the consensus estimate. To go in depth with this competitor, you have to listen to the CEO himself John Standley in the conference call. What I look for is anything going forward.

His tone was optimistic. Wellness Plus, a customer loyalty program, will push an initiative to attract new customers. Customer penetration increased ~16% up from ~14%. Innovations like 15 minute pharmacy and drive through are starting to show impact. Sales were flat due to the closing of 70+ stores, and opening of 3 stores. 500 stores are planned to be remodeled. Private brand products are starting to be pushed, and product line up transformation. Increased investing towards employee training. More store consolidation. An increase of prescription contracts.

As an investor, this is promising. This company was on a brink of bankruptcy. Now, it looks like this company will live another year and there will be no fear of losing complete value. Expect the stock price to increase prior to next earnings report. I am putting a buy $1.50 price on it. If it does dip, let the dust simmer down and buy when the volume is down. I don't see much downside though.

Edit: I disclosed my performance level compared to S&P. I will update this every 7th day of the month for those interested in following me.