Walgreen Company (WAG), Rite Aid Corporation (RAD), CVS Caremark Corporation (CVS): Is the Bull Run over for These 3 Pharmacy Stocks?

Investors are also becoming more optimistic after Rite Aid Corporation (NYSE:RAD) favorably refinanced its debt obligations with lower interest costs. However, I believe they are missing something big. In the recent severe flu season, Rite Aid Corporation (NYSE:RAD)’s inventories, unfortunately, saw shortages, and the company was forced to quickly re-supply its locations to keep up with the unexpected demand. So, if anything, growth should have been stronger than what was seen from this positive catalyst.

Recall that comparative store sales were up just 0.3% year-over-year in January despite the strong tailwind from the flu season, which largely obscured the dip in pharmacy sales. Drugstore sales actually fell 0.5% for that month. Moreover, the company also reported a 2.2% same-store revenue decline in December.

Conclusion

Pharmacy stocks have been on a roll. However, this has limited the value potential and, in some instances, obscured fundamentally weak performance. For this reason, I recommend generally avoiding these stocks.

The article Is the Bull Run over for These 3 Pharmacy Stocks? originally appeared on Fool.com and is written by David Gould.

David Gould has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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