Walgreen Boots Alliance (WBA)

The nice thing about this company is that the back end of the store, the pharmacy side, makes up about two thirds of their total business. That is the side that is going to grow through Obama care and through demographic shifts.

Has been a phenomenal performer. Bumping up against another 52-week high and they just keep going. They are now trading at quite a bit of a premium. People are looking at their alliance with Alliance Boots pharmacy chain in Europe. This gives some synergies on the cost side and the purchasing side, etc. Have been a lot of good things happening to accelerate revenue and margin. Wouldn’t be buying at these rates.

(A Top Pick Dec 19/12. Up 55.73%.) A lot of this gain came as a result of the quarrel they were having with Express Scripts (ESRX-Q) where they couldn’t agree on a contract. For a period of time it hurt this company, but he felt it was just too important for each of these companies not to deal with each other and it would solve itself, which it did.

(A Top Pick Dec 19/12. Up 61.46%.) They were suffering when they got into a bit of a tiff with Express Scripts. He had thought that it was just too important for these 2 not to be partners for very long. This solved itself.

Stock has done very well in the last year. Have a new program with Express Scripts to fund some of their business. Have also made an acquisition of 55% with an option to buy the other 45% next year of Bootes to expand their business internationally. This will be very accretive to them. 2.3% dividend yield. Trades at 19X current earnings and 15X forward earnings.

They are back with Express Scripts. It was no longer a pipeline but now they are building it back and we are seeing it in the earnings. Front end is 1/3^rd of revenues and is doing well. Acquired Boots from UK and there are synergies.

Ran into some trouble about a year ago when they got into a tiff with Express Scripts, a pharmacy benefit company. The contract lapsed and eventually Express Scripts walked. Some members couldn’t get their subscriptions from Walgreens. Walgreens has now moved off the bottom to a new high and is doing well. About a 3^rd of their business is from the front end of the store.

A place she can put her US$ in until there is a pullback in the US stock market? This is one stock you could look at. It is poised for some pretty steady growth over the next while and is reasonably priced.

His focus is on companies that are good and getting better. This company bought 50% of Boots so they are going to grow their cash flow from $3 billion to $6 billion annually by 2016. Have grown their dividend 24% a year over the last 5 years. Believes you should get 15%-20% dividend growth going forward. Dividend yield of 2.29%. There is an additional 30 million people that will become customers as the Obama healthcare plan goes in.

His model price is $62.81, a 50% upside. Valuation is probably the cheapest it has been for quite some time. Yield of 2.63%.

Drugstore chain. Lots of events in the last year and a half. Express scripts parted ways for a period of times but they have now resurrected the relationship. They bought Boots in the UK. Trading cheaply. He thinks there is great opportunity in this.

(A Top Pick Oct 24/11. Up 6.42%.) Have settled the Express Scripts situation but a lot of their customers went away so a lot of the plans went somewhere else. Slowly coming back and slowly rebuilding. This company is proactive. Bought Boots, a British pharmacy operation. Expect they will earn about $3.50 a share and are trading at 10X. Boots acquisition is going to be accretive starting next year. An excellent opportunity here.

Have a lot of locations and a lot of real estate, which is always interesting. Dilemma with this company is the prescription business. US military is re-evaluating whether they want to try and lower their costs. This is about 15 million prescriptions. All governments are looking at ways to reduce health costs. With new technologies and new delivery mechanisms, these companies are vulnerable to an erosion of fairly substantial profit component. 3% yield.