1. CVS Health Corporation (NYSE:CVS)
5-Year Net Income Growth: 10.68%
5-Year Revenue Growth: 9.87%
TTM Net Income: $7.19 billion
Number of Hedge Funds as of Q2 2024: 60
CVS (NYSE:CVS) is a health solutions retailer with operations in four segments: health services, healthcare benefits, pharmacy & consumer wellness, and corporate/other. The company has strong fundamentals, generating over $91 billion in total revenue and $8 billion in operating cash flow in the first half of 2024. It is continually executing strategies to boost its integrated value, and most of its businesses are running smoothly.
CVS has identified a multi-year opportunity to deliver around $2 billion in savings. It will do so by increasing automation and using artificial intelligence across its enterprise, continuing to rationalize its business portfolio, and optimizing and streamlining its processes. Savings through such initiatives are expected to advance the company on the path to profitability and allow it to invest in new opportunities.
The company serves more than 186 million people and increased the number of people availing of two or more CVS Health offerings to 57.5 million in the first half of 2024, undergoing a 2.5 million consumer increase. It also boosted its digital reach, with approximately 60 million unique digital customers using its platform to purchase wellness products, fill prescriptions, and schedule health services appointments.
CVS (NYSE:CVS) is taking various steps to build positive momentum for 2025. These include its disciplined approach to Medicare Advantage pricing, accelerating the integration of its healthcare delivery assets, progressing on its innovative pharmacy model and biosimilar strategy, and improving operational performance in its healthcare benefits segment. It ranks fifth on our list of the 8 high growth retail stocks that are profitable in 2024.
Ariel Global Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q2 2024 investor letter:
“American healthcare company, CVS Health Corporation (NYSE:CVS), also declined following disappointing earnings results and a subsequent reduction in full year guidance. The miss was primarily due to increased utilization of Medicare Advantage plans and weakness in the health services segment driven by the loss of a large client and continued pharmacy client price improvements. In response, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage. CVS believes the program can remain an attractive business for Aetna and CVS Health over time and will construct its bid for 2025 as a multi-year repricing opportunity across plan level benefits. Meanwhile, CVS continues to return capital to shareholders through dividends and a recent accelerated share repurchase transaction”.
Overall, CVS ranks first among the 8 high growth retail stocks that are profitable in 2024. While we acknowledge the potential of retail stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CVS but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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