Walgreen Boots Alliance

He has chosen to exit their holding about a year ago, based on their UK alliance (due to Brexit). He participates in the space with CVS instead, who bought a pharmacy benefits company. CVS has more than 10,000 locations in the US. The company has become vertically integrated, which gives them a long runway. Their "Health Hub" offers medical practitioners to people who would not otherwise have access to one.

CVS vs. Walgreens Prefers CVS. Walgreens missed their recent numbers. Walgreens is purely a pharmacy company, which faces competitive threats from Amazon and Walmart. In contrast, CVS is vertically integrated; they bought insurer Aetna for example. Pays a 3% yield. However, CVS did borrow heavily to buy Aetna, but generally CVS is in much better financial shape than Walgreens.

A disappointing stock over the last few years, especially as Amazon is getting into the space. Recent earnings were in line. They have increased dividends 44 years in a row and trades cheaply at 9 times earnings. He holds it in the portfolio and thinks it is a comfortable buy here, but don't expect a big run up.

CVS vs WBA? He thinks CVS has more growth potential. Both have been relatively poor performers over the past couple of years. The main reason being there are too many pharmacies in the US. With Walmart, Costco and Target getting involved the competition is intense and putting pressure on margins. CVS is worthy of a look following the investment in AETNA, which is helping them diversify. Amazon is expected to enter the space soon.

WBA-Q vs. CVS-N. He just bought CVS-N. Walgreens is still the pure Walgreen - Boots alliance, pharmacy business, incredibly well run. CVS-N merged with Aetna on the benefits side. The risk on healthcare is always legislation. The US is aging like all western countries. They cover all the bases. Both companies are so well entrenched that it is hard to displace them.

Attractive valuation. Owns CVS Health instead, which is vertically integrated. So CVS is better positioned in the new world of health in the US to bring down costs. CVS trading at 9-10x earnings.

Some of the big pharma concerns are real as President Trump is against drug pricing. Ultimately he does not think it will be devastating. He likes the industry, but prefers others like Walgreens.

He likes this company. His model price is over $84. They have been hit by the news that Amazon was going into their space, but he questions how that might happen. He would buy even more at $43.

I gained $1 from a recent call and put, but WGA is volatile. Take the gains or wait till the October call? Amazon is having trouble disrupting WBA's healthcare business and sector. If you want to take gains, then take half the position you got and close it out--take your profits and let the rest of your money ride.