Walgreen Boots Alliance

WBA-Q

The market in general has gone up and this have been moving down. He would need to see a move above $60 before he gets interested. He would look elsewhere.

Is it real estate reflected in its current price? The pharmacy retail space has come off a lot due to disruption. In this space, he bought Walmart instead; they do everything better yet cheaper. Disruption will make it harder for WBA to compete. The real estate is not valued in, but nothing tells him that it should either. Pharmacy retail is another industry under scrutiny, and he feels Walmart will prevail.

He was not happy with their last earnings report. There was a weakening on margins on their generic drug business and they are being affected with BREXIT because of their affiliation with Boots. He owns CVS-N who have a more vibrant long term plan. WBA-Q does not have a catalyst.

He sill owns WBA-Q. Both have been under tremendous pressure. He feels the entry of Amazon in to mail order prescriptions has hurt along with a move towards generic pricing on drugs. He feels it is way over done. These companies are foundations within the US. At some point they will bottom out, but he is not ready to add to his holdings at this point.

It is global. It will have headline noise because of the election. It could bounce back but is under pressure from dispensing fees. There are other ways to get dividend growth. 75% of their business is retail.

vs. Walgreen Still cheap. $82.60 is his target price. Some stocks you go to war with when the market or sector is negative, when investors beat up a stock. You can be contrarian and do very well with this.

(A Top Pick Apr 25/18, Down 16%) He sold upon news that its generic drug margins were deteriorating. You must look at your stocks with fresh eyes when news arises. Have an unemotional sell discipline.

The PE is lower than historically. He historically owned CVS-N. The problem with WBA-N is the political noise around drug pricing and these companies are just middlemen. He sold CVS-N a while ago. There is a lot of risk in the names for the next 5 years. Buy a half position in the name and buy the rest on later on weakness.

It's suffered the double-whammy of eliminating drug pricing talk by politicians in the U.S. and fears of Amazon getting into the pharma space. WBA has increased its dividend 43 years in a row and expect one in June. Trades at lower than 10x earnings. He thinks pricing fears are overblown. Targets this in the mid-$70s within 12 months. (Analysts’ price target is $74.35)

He decided to get out of CVS-T because they were on the defensive too much. In the US a lot of funding for drugs comes from the government. They are always looking for ways to bring down healthcare costs in the US. CVS-T keep making acquisitions to make the company make sense. He would probably prefer WBA-Q.

It looks shaky now. Hopefeully it stays in the $60-80 range. If it breaks below $60, you're in trouble. Have a short leash on this.

(A Top Pick Nov 30/17, Down 3%) Holding its own given the recent drop in markets in general. Just in the last week it has weaken based on a weak report from GoldmanSachs. They have recently guided earnings in line with market expectations. The European market slowdown is creating headwinds. It trades at less than 10 times earnings and over 2% yield with rising dividends expected next year.

They have 13,000 stores in the US and just bought many more stores recently. They struggled to bring those into the structure, but feels they are going to do well. Trading at 12.5 times earnings (about 30% discount to normal). It is a Dow component. He thinks there are good things to come.

Maybe the CVS acqusition of Aetna is synergistic by putting Aetna facilities besides CVS locations, but will this drive volume within the pharamcy? He's not sure. Trades at 10x earnings. With this purchase, their debt is higher. Wait a couple of quarters to see if the acqusition pans out.