28 AGs Attack: Who Will Blink First?

These companies are coming under fire for selling tobacco products: What's next?

Mar 23, 2014 at 8:00AM

Anti-smoking advocates notched a big victory when CVS Caremark (NYSE:CVS) declared earlier this year that it would stop selling cigarettes in its retail pharmacies beginning in October, sacrificing an estimated $2 billion in sales because selling cigarettes is "inconsistent with our purpose – helping people on their path to better health," according to the CVS website.

Now 28 state attorneys-general are urging competing pharmacies Rite Aid (NYSE:RAD) and Walgreen (NASDAQ:WBA), grocery stores Safeway (NYSE:SWY) and Kroger (NYSE:KRG), and big box retailer Wal-Mart to follow CVS' lead and end cigarette sales. The letters follow CVS' reasoning precisely, declaring that "there is a contradiction in having these dangerous and devastating tobacco products on the shelves of a retail chain that services health care needs." So far, response from these companies has been muted -- but pressure is starting to build.

In the following video, Motley Fool health care analysts David Williamson and Michael Douglass discuss the health care services available in these retail chains -- especially the work Rite Aid is doing in telemedicine -- and the impact of the letters. They also consider the biggest question on investors' minds as these companies contemplate their course of action: How much of a difference would dropping cigarettes make, and which companies will likely feel the most pressure to follow CVS?

Should you own CVS forever?
CVS made a savvy PR move by getting in front of the cigarette issue and stopping its sales of tobacco products. But is that enough to justify buying and holding a company forever? As every good investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

David Williamson has no position in any stocks mentioned. Michael Douglass has no position in any stocks mentioned. The Motley Fool recommends CVS Caremark. 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.

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