Shoppers Drug Mart Corp (SC.TO)

Sold his holdings a couple of days after the announcement about the Loblaw’s (L-T) take over. If you own, he would Sell now.

Being acquired by Loblaw’s (L-T). If you own, you could roll it over into Loblaw’s shares without paying tax. If you wait for the deal to close, there is some upside and get could get to $63-$64. He thinks he might get rid of his shares and roll the money into something other than groceries as he already owns a large position in a grocery chain.

You could sell now and buy L-T. You could get a larger position in L-T than by waiting for purchase to complete. But is this where you want to deploy the money. He was hoping for a special Weston Dividend this year but that has probably gone by the wayside. Thought shoppers was expensive before this. He is not sure if this is a great acquisition. Maybe take the money and run.

Loblaw’s is acquiring this company so the stock has gone up. There is no point in buying it now because the takeout has already been announced.

He is in favour of the proposed takeover by Loblaws. Had always thought this was a buyable company but had expected it would be a US buyer not a Canadian one. It is not a ridiculous price that they are asking, but it is a fair price. So if you are a major US company, do you want to be in Canada badly enough to be in a bidding war with the Weston family, one of the richest families in the world. Doesn’t expect there will be a 2^nd bid.

Fair valuation now but not undervalued. Have gone through 2-3 years of really stunted earnings growth as a lot of the provincial governments have lowered the fees to the drugstores. The impact of those reductions is going to be running out now so there will be more positive comparisons on year-to-year earnings growth. Not cheap at 15X next years earnings growth, but certainly not expensive.

Seems to be some kind of consolidation dance going on so these companies are going to be loaded up with cash. This one is like a sitting duck out there with no major shareholder. Great locations and doing a great job. Tremendous amount of free cash flow. Buying back stock.

(Top Pick May 16/13, Up 4.83%) A very defensive name and one of the few growing same store sales. A great company with great cash flow. Buy it and put it away.

There was concern about governments’ generic drug program but most of the re-pricing of generics has already been done. Dividend yield of 2.45% and have been growing their dividend over the last 3 years. Trades at 14X next year’s earnings and generates significant free cash flow.

A great defensive name, that should be bought and put away. Great demographics with the aging population will need more drugs and health care products.

Very well managed, huge cash shares. Showing good growth at the pharmacy level and the store front level.

All pharmacies have been having a great deal of pressure due to new drug regulations involving generics. This has put some pressure on margins. They have tried to diversify away from this in the front end of the stores. They continue to grow and continue to make acquisitions. Good long-term place to have a holding. 2.5% dividend.

A number of provinces have combined together to get even cheaper drug costs and this temporarily hit the stock but that whole negative will have run its course by the end of the year so there will be a reacceleration of earnings growth. They’ll also have the ability to acquire more independents that had been hurt by the governments’ move. Yield of 2.55%.

(Market Call Minute.) Thinks this one is facing headwinds in their reimbursements. He would prefer to own a US drug company. (See top picks.)

A decent name but just doesn’t make the cut in his book as a growth stock. A lot of overhang because of provincial drug policies and how much they were going to pay. Probably most of that has passed through the system and now there is a baseline of growth. A decent name, but in the consumer area there are names that he likes better.

Has regulatory concerns. Only a matter of time before the price cuts they had will spill over into other parts. Doesn’t feel this is properly valued by analysts. Prefers looking at this on a “price to free cash flow” basis. Doing this, it is considerably more expensive than a lot of consumer staples stock, especially some multinationals. Have to consistently reinvest in their stores, making sure they look fresh so they can drive traffic. Target (TGT-N), which is well capitalized, will be coming into the market as competition.