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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (73007)6/28/2023 7:15:07 AM
From: Spekulatius1 Recommendation

Recommended By
Lance Bredvold

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The issue with drug stores are the shrinking profit margins. This is not a new problem either, but something that has been ongoing for a while. The drug retail business is structurally challenged and this is the reason why WBA and CVS expand into health care services and insurance (in the case of CVS). CVS is much further along in this transition than WBA but CVS acquisitions seem expensive and unlikely to create much value and that’s why reduced my position (but still hold some CVS shares ). I have been adding ELV on weakness and like their prospects much better. Health care insurance is a low margin business, but does not require much capital either, so ROIC is quite high (15-20%). A significant part of the balance sheet is just float.
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