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Why Rite Aid's Treading Water in 2012

As we approach the halfway point for 2012, now's a good time to look back at what's happening with the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Rite Aid (NYSE: RAD  ) . The drugstore retailer has struggled against its stronger competition for years. Although the stock is up slightly so far this year, plenty of questions still remain unresolved about Rite Aid's future. Let's take a quick look at how the stock is doing so far this year.

Stats on Rite Aid

2012 YTD Return 6.3%
Market Capitalization $1.19 billion
Revenue, Most Recent Quarter $6.47 billion
Year-Over-Year Revenue Growth, Most Recent Quarter 1.2%
Net Loss, Most Recent Quarter ($30.7 million)
CAPS Rating *

Source: S&P Capital IQ.

Why has Rite Aid gone nowhere since 2009?
Rite Aid has failed even where competitors have found success. While Walgreen (NYSE: WAG  ) and CVS Caremark (NYSE: CVS  ) have both done a good job of earning strong profits even during tough economic times, Rite Aid has posted 20 consecutive quarters of losses. The big problem is debt, which stifles its ability to make strategic moves and creates interest expenses that in many quarters is the main reason why the company loses money.

Rite Aid has done its best to capitalize on one opportunity, though. A dispute between Walgreen and Express Scripts (Nasdaq: ESRX  ) has forced many Walgreen customers working through Express Scripts to move their prescriptions, and Rite Aid has gotten its share of Walgreen's patrons.

But lately, rumors have surfaced that Walgreen should simply buy out Rite Aid in order to compete better against CVS. While a deal would help Walgreen grow, it would also shoulder the company with Rite Aid's debt -- something that Fool analyst Austin Smith thinks isn't worth the cost.

Rite Aid's most recent quarter made some shareholders excited about its future prospects, as company management gave full-year guidance for a smaller loss than previously thought. But in the end, Rite Aid needs to figure out how to make money -- and in the current environment, that'll be a tough assignment given the company's debt load.

Rite Aid is a speculative play right now. If you'd prefer some other stock ideas with better track records of success, let me invite you to learn about three smart long-term stock plays in the Fool's latest special report. It's yours for the taking and is absolutely free, but don't miss out -- click here and read it today.

Click here to add Rite Aid to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Express Scripts. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

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