CVS Health Corp (CVS)

(A Top Pick Jun. 21'17, Down 14%) It is an interesting space. They are seeing a changing dynamic in healthcare. They are acquiring another company. Their vision is to control the patient experience. They want to provide more health care than just filling a prescription. Most healthcare service is the monitoring of chronic conditions. They should bring healthcare costs down. This is an area where the market has not rewarded them.

(Past Top Pick on April 13, 2017, Down 14%) Still likes it. It's more than the Shoppers Drug Mart of the US--it's a healthcare company. Trading at 9x earnings, good free cash flow. Their Aetna deal with work out.

Trading at 9x earnings and paying a 3.1% dividend. The success of their large Aetna purchase (which still needs approval) will depend on how well CVS integrates it, which is risky. CVS is about integration: long-term care, pharmacy and home fusion. This integration can propel higher margins. (Analysts' price target: $86.81)

A healthcare stock that pays a decent dividend is a popular hiding place, but this trade got really crowded. CVS got into a down channel. Wait until everybody has sold till you start buying. He's worried that investors are still buying and
analysts are still recommending this--they've been wrong.

The stock has been sluggish as it awaits regulatory approval for the Aetna merger. But the company enjoys consistent earnings and strong cash flow. You pay less than 10x earnings. He likes it for its underlying, high-margin retail operation which anchors the overall company in the face of regulatory threats. There's room to grow. (Analysts' price target: $86.81)

(January 12, 2018, Down 18%) Still loves the name and double-down on it this spring.

Looks cheap trading at 9 times earnings with 10% growth rate. With the pending purchase of Aetna Inc (AET-N) investors are a little concern that they paid too much. The pharmacy benefit management (PBM) space hasn’t done really well lately.

Have been caught up in the negativity about drugs pricing in the US. Because of this you are paying less than 9 times earnings. Good margins. Very consistent cash flow streams. Yield 3.1% (Analysts’ price target is $86.9)

They are trying to make inventory more accessible by technology. The pharmacy side of the business is still facing headwinds. The mixed story in a tough sector is making this not very attractive.

The stock sold off a fair bit with their Aetna acquisition. They are going to be a winner here and it is worth looking at.

He likes the health care sector and improving demographics. This is one of the leading drug store chains in the US and has the scale to keep costs down. It has reached an agreement to buy AETNA to help vertically integrate them into insurance. It trades at a great valuation of 10 times earnings and has a payout ratio of only 30%. Yield 2.9%. (Analysts’ price target is $88.10 )

An interesting company. A retail pharmacy but now also a pharmacy benefit manager and in the process of acquiring a health insurer. So, they're trying to go along the whole chain. What could happen is that the insurance side directs people to CVS' mini-clinics to perform simpler medical work that a doctor would do, such as giving injections. This could drive down U.S. medical costs (and the U.S. has issues to face here), but also drive traffic to CVS stores. As for Amazon entering this space, we'll see what the impact is.

It scores in the top percent as a cheap stock but in the bottom in term of price momentum. It is a value stock at this point.

It is only 10 times earnings and great value here. Concerns of Amazon entering into drug distribution appear to be fading due to the strict regulatory requirements. Once their recent acquisition is completed, they will be able to deleverage themselves. Yield 3.2%. (Analysts’ price target is $88.85 )

(A Top Pick January 20/17 Down 22%). A recent acquisition of a health insurer still needs to be approved by regulators. It trades about 10 times earnings. He expects them to be able purchase shares back and sees it trading at excellent value here. A well-run company.