Walgreen Boots Alliance (WBA)

(A Top Pick Aug 12/14. Up 48 point to 3%.) Originally bought this because he thought there would be an increase in healthcare utilization in the US with the Affordable Care Act. This has affected the front of the store sales and back of the store sales. In addition to that it has been a little bit of a nice riff on the European economic recovery. The real benefit is going to be the synergies that are going to accrue towards the latter half of next year.

CVS (CVS-N) or Walgreen (WBA-Q)? He owns both and they are both great opportunities. Demographically they are both in a sweet spot with the aging of the population and the need for prescription drugs. Couple that with Obama care, which mandates that people have insurance that will allow them to get those drugs. CVS trades at a couple of multiple points cheaper and also its earnings predictability is a little bit higher, but he would own both.

CVS Health (CVS-N) or Walgreen Boots Alliance (WBA-Q)? These are so similar. They are both benefiting from similar trends. This one is going with a cross Atlantic strategy and the purchasing power you can get off that. They are both benefiting from increasing drug usage and the whole story of the population getting older. You are getting some very good assets here and some very good secular growth over a number of years. Doesn’t think you will get hurt on either one.

(A Top Pick August 28/14. Up 57.44%.) Shortly after this was picked, they completed the 2^nd half of their merger with Boots Alliance. Great synergies between the 2 companies. It was just announced recently that the CEO of Boots would now be permanently ensconced as CEO of the company. The benefit from Obama care continues. Also, the tailwind of an aging population continues. Multiples are getting a little uncomfortable; it crossed 20X next year’s earnings. Very well positioned for growth. They are already talking about looking elsewhere for another acquisition.

The pharmacy businesses in general in the US are doing well. This one is a great operator. They did a deal with Boots Out of the UK, and his view is that there are great opportunities for synergies. Their most recent quarter beat estimates by 17%. Stocks that trade at $90, 9 out of 10 times they go to $100. Trading very well.

(A Top Pick June 26/14. Up 17.51%.) Thinks there is more there. They should earn probably $4.50 next year, which would put them in the 17-18 multiple, but growing quite well. This is a healthcare play. It is a drugstore. Very well-managed.

He continues to like this company very much. It is a great area to be in. They have the demographic wind at their back with more and more people getting older and needing healthcare. Have a very nice arrangement with AmerisourceBergen (ABC-N) for generic drug supplies.

It looks alright here. The acquisition will probably work out rather well. It is a bit of a retail play on healthcare. It should be fine.

The company is doing very well. The back part of the store is the pharmacy area. Obama care leads to many more insured which leads to many more drugs being dispensed, which is a very profitable part of their business. Have gone into a joint venture with AmerisourceBergen (ABC-N), a generic distributor, which allows them to source these drugs much more efficiently and effectively. Thinks they will earn 360 this year and 440 next year. Yield of 1.81%.

Drugstores is a defensive sector. Chart shows this is just breaking above its high that it attained earlier in the year. From a seasonal perspective, this is not usually the best time to be in this type of stock. Usually the summer is the best time to get into these stocks. 1.8% dividend yield.

Walgreen (WAG-N) or CVS Health (CVS-N)? If he had to pick one, it would be CVS.

Very large pharmacy operator in the US. He has chosen a competitor, CVS (CVS-N), which has the added benefit of running a PBM (Pharmacy Benefit Manager). About a year ago, CVS discontinued selling cigarettes, and he is hearing that a number of their competitors are getting the pressure from other corporate customers that they would have.

There are 2 things he looks at when looking at trend identification. 1st is higher highs and higher lows. The other is the 200 day moving average. He does not want to see penetration of both. You could suspect that currently it is a trend line, but possibly not. If the 200 day moving average is supporting the low, and it bounced off of a level that was higher than a much more significant low, it is probably in pretty good shape. So far it looks okay.

The growth is still there and they still have market dominance. Well-positioned in terms of where the consumer is going and where the retail pharmacy industry in general is positioned.

Likes drug stores. Beneficiary of a lot of demographics concerns. Buy it here. It has a good base in around $60. CVS also looks very interesting.