Walgreen Boots Alliance (WBA-Q)

The CEO is starting to put her stamp on the company, supporting their workers. They announced today they will raise wages, and shares rallied. Let's see them get into e-commerce and battling Amazon. The valuation is attractive. Most importantly, the company remains in transition and he is a firm believer.

He prefers CVS. WBA has spun its wheels a bit. CVS has better management, and it's vertically integrated with Aetna and its pharmacy benefit manager.

The CEO holds a special call on Tuesday. The CEO used to be the COO of Starbucks (which he owns), so WBA is in good hands.

It has frustrated investors. This is oversold, but is worth holding. It carries a decent balance. Not all these drug and health companies are being destroyed by Amazon.

CVS-N vs. WBA-Q. He has been cautious over the last 3 to 4 years as there were too many drug stores. He would pick CVS-N and has just bought some because of their vertical integration.

They report next week. He hopes they lower expectations. WBA is a great conundrum with great stores and pharmacies on one hand, but Amazon knocks the stuffing out of them.

The prescription drugs business is under attack, and the front of store is under attack from Amazon. Doesn't see any catalysts to raise this stock.

He has owned CVS instead in the past. This and WBA have been hit hard in recent years from a lingering concern over pressure on drug prices in the U.S. So, both have expanded into drug distribution, not just drug retail. The multiple that the market will pay for either has compressed. So, he prefers other stocks in this space, like Loblaws (which owns Shoppers Drug Mart) Drug. Traditionally, drug retailing is a stable business, but in the U.S. the pricing issue remains an overhang.

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.