CVS Health Corp (CVS)

A drugstore chain, but it also has a Pharmacy Benefits Manager (PBM) aspect to it. That aspect is very profitable for them, and represents about a 3^rd of their business. They are also quite acquisitive having just bought Omnicare, a pharmacy group that concentrates on nursing homes. A profitable and growing area.

The leading US drug retailer. Drugs account for about two thirds of their revenue with the rest coming from Pharmacy Benefit Managers. The company targets a compound annual growth rate in earnings of 10%-14%, and she feels they are on track. Acquired Targets’ pharmacies last year, which increase their presence by about 10%-15% in terms of location. Dividend yield of 1.78%.

The drugstore space has been tougher over the last couple of years. If you are going to be in retail, he would prefer something like dollar stores, low-priced retail, and home-improvement companies. This pays a 1.8% dividend and is going to grow its revenues at 12%-13% this year. Technically though it is not one of the stronger performing companies. You may want to move on to something new.

This has grown organically and through acquisitions. With Walgreens, it is the largest retail pharmacy chain in the US, and has about 9600 locations. Also, one of the largest PBM players in the US. They have given 23% dividend growth for the last 7 years per year. Management is very shareholder friendly. Dividend yield of 1.8%.

Kind of in the middle of the pack on momentum, valuation and 15% ROE. A little expensive on an EBITDA basis of around 11X. Nothing stands out as a major problem. There is no debt problem. Has a small yield. He sees no reason to own this.

You are dealing with a staple, so you have a rich valuation. Likes their diversified model with the retail component and the PBM (Pharmacy Benefits Management). They put up very consistent double digit growth. Trading at 15-17 times, so you are paying for it, but you are also paying for its consistency. He would be very comfortable with this name.

A good stock. They are doing a lot in prefiguring the store format. A defensive name in healthcare.

(A Top Pick March 30/15. Down 1.55%.) Has been relatively flat for the past year, but he really likes the space. There is a demographic tailwind. Also, the Affordable Care Act is bringing more people into the drugstore with insurance plans. They do over 1 billion prescriptions a year. Also, vertically integrated being a pharmacy benefits manager as well. Recently acquired Omnicare, a long term care provider. Thinks they will get about $6 a share in earnings, so it is not expensive. Still a Buy.

(Top Pick Mar 5/15, Down 0.88%) He saw it was starting to be toppy. The dip at the end of the summer didn’t give him confidence. He likes the sector and would revisit this one.

It is all US, the largest drug pharma chain as well as their benefits management plan. It plays into the aging population. They should benefit from lower energy prices with the consumer spending more money. They acquired all the pharmacies in Target. The penetration rate in Target pharmacies was at 5-7% so CVS-N believes they can increase that penetration rate. They increase their dividend regularly, currently 1.7%.

You want exposure in the US to healthcare. This one is the best one in the space. Those that can generate top line growth are being rewarded. This one has a sustaining factor. They are tied to the consumer and are taking market share from competitors.

One of the best in its field. The demographics are going to benefit them. At this price, you could buy it here.

Reported this morning. Had pretty decent results and were on target. She likes healthcare as a long-term investment play, because of aging demographics. They have the Pharmacy Benefits Management business as well as their retail. Very uniquely positioned. Made an acquisition last year that brings them into the long-term care channel as well as buying the pharmacies from Target. She would start buying this here. It has pulled back.

This has set back from its high, but FMV is only about 18%-19% above where it is now. That may be enough to turn things around. It is on structural support at around $94, and maybe it will rebound from here, but the stock isn’t cheap. If there is further weakness in the market, he wouldn’t be surprised if this falls further.

They are a strong pharmacy benefit manager, as well as a pharmacy. They recently bought Omnicare, who supply nursing homes with a billon prescriptions a year. They are predictable. 15 times earnings. It is a great place to be if you are nervous about China.