Toss out some hot stock tips!

[Cloister]

Originally Posted by The Sad Man

Definitely get her involved in the stock plan, especially if she can buy at a discount. I just see a ton of growth potential for pharmacies as aging (unhealthy) baby boomers grow dependent on prescriptions. Walgreen's numbers look clean and I've seen many new stores open up around my area (yeah not the greatest indicator but it's still mostly positive). Both Walgreen and CVS took a huge hit today because of Walmart's $4 generic prescription release. It might be a good time to buy for the long run now. I still think both of these stocks will do very well over the next 10+ years.

A big question mark to me is the future impact of Wal-Mart. As you note, they just announced a pilot program (in Tampa I believe), in which they'll be selling generic prescriptions, that would have gone for $10 - $30 for a 30 day supply, for only $4. Imagine if they can exert their pricing power on pharma companies the way they do other manufacturers - this could put a big squeeze on the more traditional pharmacies.

[BuckyBadger]

A big question mark to me is the future impact of Wal-Mart. As you note, they just announced a pilot program (in Tampa I believe), in which they'll be selling generic prescriptions, that would have gone for $10 - $30 for a 30 day supply, for only $4. Imagine if they can exert their pricing power on pharma companies the way they do other manufacturers - this could put a big squeeze on the more traditional pharmacies.

Very interesting point, Wow!

[The Sad Man]

Originally Posted by Cloister

A big question mark to me is the future impact of Wal-Mart. As you note, they just announced a pilot program (in Tampa I believe), in which they'll be selling generic prescriptions, that would have gone for $10 - $30 for a 30 day supply, for only $4. Imagine if they can exert their pricing power on pharma companies the way they do other manufacturers - this could put a big squeeze on the more traditional pharmacies.

I don't believe they'll be able to muscle around the nation's biggest pharmacy chains (CVS and Walgreen), which I think have enough market share right now to counter anything Wal-mart attempts, if it comes to that point. I also don't believe Wal-Mart will get too deep into battle with them since it's not Wal-Mart's main focus. WMT knows it's not going to make a killing on its pharmacy sales; they just intend to lure customers into their stores, hoping they'll meander through the many other isles and departments and contribute to where WMT makes its big bucks.

It might kill those tiny mom and pop pharmacies located in some small town in the middle of no where. I want to say WMT owns the rural or Mid-Western communities. They can't dominate urban areas simply because there's no room for their massive stores. You can't plop down a WMT every few blocks like you can a CVS or WAG.

But really, how many people in the Mid-West/rural towns don't already shop at WMT? I have doubts that this plan will attract many new customers.

[The Sad Man]

http://money.cnn.com/2006/09/25/news...ion=2006092509

Not worried about Wal-Mart
Walgreen reiterated that it does not expect Wal-Mart's new $4 generic drug plan to have a significant impact on its business.

Wal-Mart (Charts) last week stepped up its efforts to dominate the market by announcing it would start selling nearly 300 generic products at greatly reduced prices.

Shares of CVS and Walgreen tumbled following the news as investors fretted that Wal-Mart's new plan would hurt other drugstore chains.

Walgreen's management chose to begin its pre-recorded earnings call Monday by addressing Wal-Mart's latest healthcare initiative.

Rick Hans, Walgreen's director of finance, said during the call that he believed Wal-Mart's low-price plan for some generic drugs"won't significantly impact [Walgreen's] business."

The Wal-Mart plan covers 291 drugs, while Walgreen pharmacies stock about 1,800 generic drugs, he said.

"About 95 percent of our pharmacy patients have prescription insurance coverage and they are only responsible for a small co-pay," Hans said

He added that for the drugs that Wal-Mart will sell for $4, the initial average co-pay at Walgreen is $5.30, and $3.18 for Medicare Part D prescription coverage.

"Our convenience, locations and services have proven to be bigger factors for our patients than a few dollars in price difference," he said.

[Klaymen]

This isn't a specific hot stock tip as much as useful information on Morningstar's take on large caps:

http://news.morningstar.com/article/....asp?id=174110

[The Sad Man]

WAG and CVS getting creamed again today. I definitely sense a buying opportunity.

Buying opportunity?
Several analysts called the pullback a buying opportunity.

"We strongly believe that Wal-Mart's strategy sounds worse than it really is," said John Heinbockel, who covers drugstores for Goldman Sachs.

Although generic medicines are cheaper, they are more profitable for pharmacies since the prices of branded drugs are tightly controlled by the major drug companies that manufacture and sell them.

Not everyone on Wall Street was bullish. JP Morgan analyst Stephen Chick downgraded Walgreen to "neutral" from "overweight." "This seems like a longer-term threat that extends beyond mere cash prescriptions," he told clients in a note.

BB&T's Wolf said that if Wal-Mart were to discount other generics, it "would likely have a major impact on the profitability of drugstores. However, we consider this unlikely, since it would also impact Wal-Mart earnings negatively, which yesterday's pricing move likely did not."

Baker said that customers who pay with cash, rather than through insurance, seem to be the most likely users of such a plan, and represent a small fraction of the chains' customers.

Late Thursday, CVS said that the drugs Wal-Mart plans to sell for $4 are already low-cost and that cash sales represent less than 0.5 percent of its total pharmacy sales.

Walgreen also said it does not think Wal-Mart's plan will have a significant impact. Nearly 95 percent of Walgreen's pharmacy patients have insurance coverage, so they just pay a co-pay. A Walgreen spokesman said the average co-pay for the medications on Wal-Mart's list is just over $5.

"The difference is not enough to change our patients' behavior," he said.

Reaction to Medicare
In some cases, the Wal-Mart plan could even cost more. Walgreen said it gets just over $3 on the 291 drugs on Wal-Mart's new plan from seniors on the Medicare Part D plan.

Baker said Wal-Mart's plan could be largely a reaction to the Medicare Part D drug plans now in effect.

"Those seniors that, as a result of gaining drug coverage under the plan, welcome some freedom of choice with respect to determination of where to fill their scripts, have or might transfer files to community pharmacy from mass merchants," she wrote. "[Wal-Mart] is over-indexed on uncovered Americans and has the most to lose in respect to a shrinking cash pay segment."

Baker said she finds the Canadian market more attractive in general due to a different regulatory environment.

"Those wishing to also avoid the headline risk in this particular issue could look to Shoppers Drug Mart, our favorite (North American) name in this space," Baker said.

[axjoke]

Any of you guys use the average analyst 1 year price estimates? I never do, but the one thing I've noticed is that they tend to be creative in coming up with 1 year forcast that are almost always higher than the current stock price. So when a company that is well followed is trading above the analyst estimates it sure makes me wonder.

NVDA, AMD, UARM... etc were all doing this just the past week.

[Baron Von Raschke]

Originally Posted by axjoke

Any of you guys use the average analyst 1 year price estimates? I never do, but the one thing I've noticed is that they tend to be creative in coming up with 1 year forcast that are almost always higher than the current stock price.

Nah. Sometimes I will check the S&P report (available on Ameritrade) or even better, Valueline (when I am at the library), but the average analyst price estimates mean very little to me. They make money becuase people want to buy something new, and the averages are often from different points in time which means different information factored in. It's silly to try to guess as short a time as a year out.

[Baron Von Raschke]

Originally Posted by Baron Von Raschke

I say Starbucks.

Up about 20% since my rec. Hope everyone backed up the truck like I did. Early retirement here I come.

[axjoke]

Originally Posted by Baron Von Raschke

Up about 20% since my rec. Hope everyone backed up the truck like I did. Early retirement here I come.

I might have had there not been juicy bond funds (PTY) selling at large premiums just waiting to crash on me. lol

Good suggestion.. maybe I'll listen next time.