Walgreen Boots Alliance (WBA)

(Past Top Pick Nov. 30, 2017,Up 8%) The Amazon fear of taking over this space was unfounded. WBA sales are a little weak, but beat on earnings. Trades at 11x earnings and pays a 2.5% dividend which they've increased 42 years in a row and he expects another in January. A defensive play.

It is getting traction. He thinks it is going to be part of the solution to the health care problem in the US. Everybody is traying to solidify the relation with the patient. They are well positioned to do that with a lot of locations. 13,000 drugstores in the US. Most health care issues are not urgent. Companies like this are vertically integrated creating alliances with other companies in the health care chain. It is going to do well in the long term. Be patient.

The stock sold off when Amazon.com (AMZN-Q) entered the field. This is an area where they are going to make solid inroads into.

It's trading at a low multiple, around 10x. But the worry is that Amazon will destroy Walgreens' model. What the market is missing is that Walgreens has 13,000 U.S. storefronts close to most of the American population. (CVS, which he
also owns, has 10,000.) The effect is to create a relationship with the patient/consumer so they can interact with a medical professional. Society is getting older, so chronic medical conditions will increase. These folks won't go to the
most expensive places to be served, meaning hospitals and emergency rooms.

He thinks the impact of AMZN-Q coming into the space is over stated. When you look at the valuation of WBA-Q today, the huge scale, he has a lot of trust in the management. They are generating a boat load of free cash flow. (Analysts’ target: $71.39).

One of the largest phramacies int he US. In the past year they bought several hunreds Rite-Aids, giving them a needed footprint in the American northeast. Cheap with less than 10x earnings. There are worries of Amazon coming into this sector, but Walgreens won't roll over and let them take over. They enjouy a good growth rate. (Analysts' price target $81.25)

(A Top Pick November 30/17 Down 11%) Reports that Amazon will not enter hospital pharma helped the price on Monday. It is down to 11.5 times earnings and demographics are good. He is going to continue to hold this one. Yield 2.5%.

(A Top Pick Aug 2, 2016, Down 17%) Putting Boots into Walgreens has been quite a challenge. Still a well run business and a cheap stock.

They reported earnings today that were better than market expectations. The opioid crisis is creating some concern among investors in general in this space. Overall a good company that generates a lot of cash.

CVS Health Corp (CVS-N) vs Walgreen Boots Alliance (WBA-O) or stay out of health care? He prefers Walgreen between the two, due to their Rite Aid acquisition. They feel that a safer option is AmerisourceBergen (ABC-N) as they are more on the distribution side.