Shoppers Drug Mart Corp (SC.TO)

TOP PICK
Top Short Stock hasn't gone anywhere in the past year. When this happens to a stock, it is either building strength or it never got to where it wanted to go in the first place on the downside. Expects it to go 20% lower to around $36-$37 with a slim outside chance it could be worse on the downside.
TOP PICK
(Top Pick Nov 3/08, Down 1.82%)
TOP PICK
Continually produced great results quarter after quarter. They are in discussion with e ODB in Ontario but he thinks that is way overblown. It’s a great opportunity to buy probably Canada’s best retailer at 13 times next year’s earnings.
DON'T BUY
Defensive sector – has under performed. The problem with SC is what’s going on in Ontario.
WAIT
He is looking at buying it. It was a growth stock and is becoming more of a value stock. There is legislation potentially coming on in Ontario that will potentially affect how they are paid for prescriptions. They are actually losing money on servicing those prescriptions. Thinks the stock is being overly pressured by this news and it would present an opportunity. He is waiting to see that the government will not do anything rash to the industry.
BUY
Not too worried about legislative changes affecting them. Top of the list for consumer staples, which is lagging right now. Looking to add to the position.
DON'T BUY
Having a lot of expansion and he is concerned about how many stores a community needs. Doesn't see it moving much higher from here. Doesn't have an extremely attractive dividend.
WAIT
Waiting to see what new reforms the Ontario government is going to have in pharmacy regulations.
DON'T BUY
A retailer but he looks at it more as a consumer staple. If you are looking at an economic recovery, he is not sure how well this will do relative to something else. Trading at 14X earnings. Has always had a bit of a premium.
COMMENT
In an interesting dilemma. Stock hasn't performed lately because of possible changes to prescription drugs/regulations in Ontario. Some think this will affect them by $.40 a share in earnings. He sees $.20. This makes it a no-growth company rather than a low-growth company. 2% dividend.
TOP PICK
Market has reacted to regulatory changes in Ontario for the worst-case scenario. He thinks it’s actually a really safe place to be.
TOP PICK
Great cash flow story. 2% dividend is probably on the low side of what she would be looking for but the growth in dividends over time is going to be pretty marked. A defensive staple name. Very visible growth outlook.
TOP PICK
Thought the earnings were pretty good but the market hated it. Growth rate may not be as strong at 6%-7% but they are consistently profitable. Makes money both in the pharmacy and in the front of the store. Trading around 14X next year's earnings, which is cheap for them.
TOP PICK
Top Short Not participating with the rest of the market. A laggard. Either Short or if you own Sell. If you Short don't let it go over $46. He thinks the stock will take out the 52-week low of $41.39. Before Shorting, you could wait to see if it goes below $41.39.
PAST TOP PICK
(A Top Pick May 5/09. Up 4.3%.) 5.19% Bond due January 2014.
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