Filed under: Competitive strategy, CVS Corp (CVS)

Continuing with our defensive stock series, with the markets in a choppy / consolidation mode (or perhaps worse), the drug store chain sector has appeal as a defensive strategy, and CVS Caremark (NYSE: CVS) is a superior performer in the aforementioned sector.

CVS has used acquisition (1,100 Eckerd drugs stores acquired in 2004, 700 Albertson’s drugs stores acquired in 2006) and a super-rigorous, systematic store opening plan to create the drug store world’s equivalent of a lien, mean, fighting machine: more than 6,200 stores in 43 states.

CVS has the resources, economies of scale, and, arguably, most importantly, the store site selection experience to continue to drive impressive revenue/EPS gains. Further, recent improvements in inventory processes and cost management support the above, and the acquisition of Caremark should add new clients/customers. True, back-store (pharmacy) margins may be pressured by generic competitors, but the front-store (everything else) should make up for it in 2007-2009. CVS’s shares closed Tuesday up 39 cents to $40.11.

Continue reading CVS (CVS): methodical and efficient, if not idyllic

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This entry was posted on Tuesday, October 23rd, 2007 at 10:23 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.