Walgreen Boots Alliance (WBA)

We should not judge when we sell or buy on a gain or loss in the past. It has an emotion effect, but in the end no one cares what we paid for it. They had a loss based on an acquisition, but it was expected. They were exploring a tax inversion process, but in the end they backed away because it was domestically unpopular. They had a hiccup on financial guidance for which they have been punished. A good stock to own or hold if you already own it. See through the short term blips.

One of the problems with the drugstore space, is Wal-Mart (WMT-N), which is increasingly aggressively becoming a pharmaceutical house and a low-cost provider of prescriptions. This is harder for the drugstores to compete so they try to push the front of the store merchandise where the margins are good.

This chart is not looking too favourable here. Seasonal strength for this and stocks in general is to be from about the beginning of June all the way through to the end of the year. The 50 day moving average is pointing lower and he would think that would be resistance going forward.

The drug store area is a decent place to be, revenues growing at 6-7%, PE is 18. You can keep this stock. Wait if you want to buy it.

Just started working on this and finds it very interesting. Has always liked this company. The leading drug store in the US as well as now being a big player in Europe. Good franchise. Looks like a pretty good investment, but he hasn’t made a firm decision yet.

They decided not to go with the tax inversion and this is now a buying opportunity. Trading at about 16.5X next year’s August earnings. Great franchise with room to grow; particularly now with Alliance that is going to join the fold this fall. Their buying power is going to be enormous. Yield of 2.23%. $71 is very easily attainable.

(A Top Pick Aug 20/13. Up 29.71%.) Stock fell precipitously about 2 weeks ago, on the news they were not going to do a tax inversion. Had bought a minority interest in Allied Bootes, a UK drugstore chain. Had an option on the rest of it which they exercised and announced they were moving their headquarters to Switzerland. This is a tax inversion. He was surprised that it sold off as much as it did. A good opportunity to move into this negativity. Long-term, great company.

Retailers don’t excite him, especially on the drug side. When you see a pull back like this you should be buying the pullbacks. Pretty stable earnings company.

They were going to complete the acquisition of Alliance Boots in Europe. Part of the rationale for that acquisition was that it would lower their overall tax rate. That didn’t happen and the stock sold off. Thinks the sell off gives a good buying opportunity. There is a really good growth profile ahead of them. You can expect 4%-5% organic growth in addition to a pretty decent dividend. A good way to play a recovery in Europe without having direct European exposure. He likes some of the US drugstore stocks in that it is also a riff on the Affordable Care Act, which requires more people to get insurance. When you have insurance, your prescriptions per capital are about twice as high as when you don’t have insurance. Yield of 2.17%.

This is one of those companies that has great real estate, great locations and a strong management team. Fairly high multiple stock. These are the stocks that do not do well in a rising interest rate environment. Also, they are slowly having some of their competitive opportunities taken away by the Amazons of the world.

The largest drugstore in the US and have done very well. Just did a joint venture with AmerisourceBergen (ABC-N) to get their generic supply. Bought Bootes in the UK and there are lots of synergies coming out of that. The back end of the store is doing well. They have about a 10% margin on prescription drugs and about 40% margin on generic drugs.

(Top Pick Apr 9/13, Up 27.73%) Wishes he didn’t come out of it. He had been moving to more economically sensitive sectors. No reason why he couldn’t own this today.

She sold out because it hit her valuation target. It will be a cross border / cross the pond pharmacy. She is comfortable with a lot of the others in her portfolio.

(A Top Pick April 9/13. Up 40.43%.) When he invests, he always looks for some kind of catalyst that takes a good company to a better company to get a multiple expansion. About a year ago, this company made a bunch of acquisitions with the premise that they could squeeze a lot of costs out and consolidate the stores. A few months ago, he reduced his consumer weight to move more towards industrials, which is the next stage of the recovery. This continues to be a good play but he wants a little more focus on industrial as opposed to consumer today.

Was up about 55% last year. Have about 8100 drugstores in the US. The only weakness is the severe weather. Quite a few stores concentrated in Chicago and Detroit and it might impact a little bit of the foot traffic. Likes this one.