Purchase Date: March 29th, 2017
Purchase Price: $78.78
Current Price:[stock_ticker symbols="CVS" show="name" static="1" nolink="" speed="10" class=""]
Why We Like CVS
Everybody knows that retail is getting hammered – eCommerce is eating the lunch of several businesses, and rumors of Amazon starting a pharmacy has sent this stock down from a high of $112 per share in 2015.
We don’t believe drugstores such as CVS (NYSE: CVS) & Walgreens (NSAD: WBA) are going to be disrupted by eCommerce, there are regulations at play, and CVS is doing a great job of diversifying their business by offering walk-in clinics.
Walk-in clinics offer substantial value in today’s healthcare environment, where patients absorb pay more of a deductible. This is something Amazon can’t disrupt unless they substantially increase their brick & mortar presence.
Aside from the long-term health of the business, their price to forward earnings is 12.5, while the S&P 500 is closer to 18, and they’re paying a 2.5% dividend yield.
We believe CVS Health is a great company to invest in at a discount relative to the S&P 500 – Amazon is an incredible competitor, and we believe there are far more industries they will disrupt before they get into the pharmaceutical business.