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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Ken W who wrote (24245)	3/20/2001 9:05:28 PM
From: JoeinIowa	Read Replies (2) \| Respond to of 29382

Still can not find anything I like about RAD. Of course if I had bought it before it started going up I would have liked that. LOL. Good luck guys. Monday March 19, 9:17 am Eastern Time MotleyFool.com - Daily Double Daily Double: The Rite Aid Stuff By Rick Aristotle Munarriz Rite Aid Corporation Ticker: (NYSE: RAD - news) Phone: (717) 761-2633 Website: riteaid.com Price (3/16/01): $5.65 How Did It Double? It wasn't what the doctor had ordered. Two years ago, the country's third largest drugstore chain came to grips with accounting irregularities that inflated profits by just over a billion dollars. The prognosis for Rite Aid (NYSE: RAD - news) wasn't good as the Securities and Exchange Commission (SEC) closed in and restatements went out. The company's auditor bailed and executives were flushed out. How far will a ghost chase you down the road to recovery? Just three months ago the stock fell below two bucks a share. Despite new leadership, Rite Aid still had billions in debt on its balance sheet and was producing erratic operating results. The leveraged company had gotten too thick for its own good. Over the past five years, debt had grown fivefold while heady expansion had revenue growing at barely half that rate. The ever-growing interest payments proved to be a burden. Rite Aid has produced an operating loss over each of the last four fiscal years. While the estimates are calling for the red ink streak to carry over to five years now, the company has made inroads into paying down its debt and same-store sales have been brisk in recent months. While far from perfect, the fact that the company is taking steps in the right direction has not been lost on Wall Street. Investors are beginning to buy back in and renewed optimism has filled the prescription. Business Description With just over 3700 locations, Rite Aid is the country's third-largest retail drugstore chain. While the Pennsylvania-based company's stores sell over-the-counter items, its stock trades on the New York Stock Exchange. Financial Facts Income Statement 12-month sales: $15,257.1 million 12-month income: ($1,801.1 million)* 12-month EPS: ($6.94)* Profit Margin: N/A Market Cap: $1,884.3 million *excludes non-recurring items. Balance Sheet Cash: $117.5 million Current Assets: $3,507.2 million Total Assets: $8,501.7 million Current Liabilities: $2,027.0 million Long-term Debt $4,547.0 million Total Liabilities: $8,646.0 million Shareholders' Equity: ($163.7) million Ratios Price-to-earnings: N/A Price-to-sales: 0.12 How Could You Have Found This Double? Back in October, Rite Aid sold its PCS Health Systems subsidiary to health benefit management services specialist Advance Paradigm. Renamed AdvancePCS (Nasdaq: ADVP - news) after the acquisition, the stock has been on a tear more than quadrupling over the past year. That gave Rite Aid something it didn't have to borrow: collateral. Now able to raise cash through the sale of its stake in AdvancePCS, and with a healthier share price affording it the ability to convert some of its debt into stock without its creditors screaming blue murder, Rite Aid has leverage over its leverage. This new fiscal year appears to be the first in which Rite Aid's debt level will decrease. For a company with a lot of money to earn before it can clear its interest expense hurdle, that bar is now being lowered. So was this Double easy to catch on to? Hardly. Most Fools would probably wait for confirmation that debt levels will continue to shrink beyond these one-time transactions. Where to From Here? Does Rx mark the spot? Hacking away at a mountain of debt is never enough. The company is beginning to shape up on the operations side, too. In the third quarter, EBITDA (earnings before interest, taxes, depreciation, and amortization) shot up by 53%. Clearly, Rite Aid is hacking away at both ends. That will continue to make a difference in getting the market to forget about the accounting gymnastics of the past. The company is focused now. As a matter of fact, the company didn't open any new units during the November quarter, closing two dozen locations and simply relocating a few others. Keying in on the 3,742 remaining units is the right game plan for the concept now. Let the growth come from improving operations, not necessarily top line expansion. However, there will be revenue growth at the store level even without breaking new land. The trend was solid during the final quarter. Over the past three months, comps have grown by 9%, 12.7%, and 12.0%, respectively. Rite Aid is still a risky investment. Credit agencies have applauded the recent debt reductions, but now the company is running out of things to sell. While a healthy share price may pave the way for a secondary offering to raise greenbacks, odds are the company will have to earn it the rest of the way. Can it? Will it? That's a hard call to make and even the savviest fiscal doctor will probably recommend a second opinion.

To: Ken W who wrote (24245)	3/21/2001 4:13:10 AM
From: Ditchdigger	Read Replies (1) \| Respond to of 29382

"I don't even look at it, just have a GTC sell at 7.375." Good morning Amigo's..Ken, I'm curious how you arrived at this limit sell price? I see a number of bottoms at 6.50 and would view that point as first big time resistance,,next higher resitance point would be around 7.75/8.00, which would fill the gap from 8.5 to 4.5 or there abouts..Please explain, you seem to have this "range" playing stuff down pat<g>...Sergio, thanks for the block info..quite a few large blocks traded during the day.. stockcharts.com