CVS Health Corp (CVS)

Has pulled back a lot this year. Inexpensive and defensive.

Inexpensive. Frontline pharmacy, insurance, and PBM all rolled into one. Just bought a healthcare provider to tap into in-home and rural opportunities. Less than 10x earnings, big free cashflow. Market's nervous about debt, about $20B. CEO is a smart operator. Yield is 3.23%.

Very strong assets at large company.
Recent pullback in share price presenting good buying opportunity.
Significant upside possible for the long term.
Buy on weakness.

Management warned of headwinds, yet analysts have not changed estimates. FMV has been getting bigger as stock price has fallen. Nice balance sheet. Decent yield. Loads of upside, after potential short-term weakness to $75-76. Healthcare has been pummeled more than people were expecting. Be cautious buying more.

Similar but different. He owns JNJ, expects a resurgence of spending in the medical area. JNJ will also benefit from splitting up its businesses, and he expects increased value from this move.

It has come down in recent month, but long-term demographics are wonderful for health. Stick with it, because it will do well. None of us getting any younger.

Bulls counter that revenue over that three-year time span has grown 7.8% and the PE of just under 10x is very attractive. Also, CVS’ 2.82% dividend yield is secure at a 70% payout ratio. As for Oak Tree, CVS needed to add primary care to keep pace with its competitors, so Oak Tree will pay off in time. Be patient. Add to the company’s fine debt management at roughly 40% debt to total capital. Read Buying pullbacks: DOL, UNH, Linde for our full analysis. 

Great healthcare company. Quietly building into a major US healthcare company. About 10x earnings, tremendous free cashflow, reasonable balance sheet of about 40% debt to total capital. CEO had done a fabulous job. Would pound the table on this one.

Unique healthcare exposure. Retail pharmacy, PBM, health insurer. Recent acquisition of primary care network. Vertically integrated, synergies across the platform. Inexpensive at 10x earnings, 8% FCF yield. Regulatory reform is an overhang. Covid proved how essential it is. Yield is 2.74%.

They delivered a sold quarter, and he likes their purchase of Oak Tree.

It reports Wednesday. Why is it a dog? It isn't the company, but rather it's suffering the Covid hangover--it's suffering bad YOY comps and last year was Covid. A bigger question is whether they can afford more staff? Another woe is theft.

Why aren't shares higher? They made too much money during Covid, and so is facing a backlash now, and CVS faces a labour shortage.