Where Did Rite Aid's Analyst Upgrade Come From?

Rite Aid has had its share of struggles over the past few years, but Goldman Sachs just upgraded the stock to a buy and raised its price target. Is this stock stronger than it seems?

Mar 14, 2014 at 5:07PM

Earlier this week, Goldman Sachs upgraded Rite Aid (NYSE:RAD) stock from neutral to buy, and increased its price target to $8. While the company has had some major struggles over the past few years, suffering a total net loss of $1.4 billion between 2010 and 2012, this week's upgrade was largely based on the company cleaning up its balance sheet, closing unprofitable stores, and moving toward a turnaround. But while the company did report a profit of $118 million last year, with shares up nearly 300% for the year, the latest numbers from Rite Aid did not look very strong.

In this video, Motley Fool consumer goods analyst Mark Reeth takes a look at the bear case for the stock, but gives investors several factors to keep in mind that he thinks will offset the bearish view. He agrees with Goldman here: He sees the turnaround happening, and thinks Rite Aid is an easy under-the-radar buy today.

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Mark Reeth and Michael Finarelli have no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. 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 Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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