Rite Aid Slumps Again on Margin Worries, Dow Rallies to Record Close

Wal-Mart's annual shareholder meeting does little to affect the stock; Melco Crown Entertainment shares slip as Macau deceleration in focus.

Jun 6, 2014 at 6:29PM

Spurred on by another month of strong jobs growth in May, stocks were up across the board on Friday. The Dow Jones Industrial Average (DJINDICES:^DJI) notched a record closing high after the Labor Department said that nonfarm payrolls increased by 217,000 last month, and total employment is now higher than its previous peak in January 2008. Twenty-one of the Dow's 30 components ended higher, as the Dow tacked on 88 points, or 0.5%, to end at 16,924.

Wal-Mart (NYSE:WMT) was one of the few stocks in the Dow that didn't benefit from Wall Street's bullishness Friday, as shares failed to break even, losing 0.1%. At the annual shareholders meeting today, investors got a look at the company's new 47-year-old CEO Doug McMillon, who took over from Mike Duke in February. While McMillon's 30-year rise from hourly associate to top dog is indeed an inspiring career arc, many of Wal-Mart's current employees don't feel like their employer cares much about their financial livelihood. Wal-Mart workers across the nation staged strikes this week for better wages in conjunction with the shareholder meeting.

Meanwhile, shares of drugstore Rite Aid (NYSE:RAD) continued their two-day sell-off, losing 1.9% on Friday. The stock was clobbered to the tune of 7.4% yesterday, after the company said higher drug costs would crimp its profit margins in fiscal 2015. Rite Aid's business and stock have been on a steady tear for the last few years, as improved margins have fueled tremendous bottom-line growth. It's troubling to see margins slip like this, but even after Rite Aid's pullback, the stock is priced for tons of growth, so it's hard to say it's a screaming buy right now.


One of Melco Crown's Macau hotels, Altira. Source: company website

Shares of Melco Crown Entertainment (NASDAQ:MPEL) took an even bigger hit today, shedding 2.8% in trading. The casino industry in Macau -- the only place in China where gambling is legal -- has captured Wall Street's attention in recent years, as the legal monopoly that companies like Melco Crown enjoy in the region has generated jaw-dropping profits. Melco Crown itself swung from losing $2.4 billion in 2009 to generating nearly $5 billion in profits last year. But a recent slowdown in Macau's gaming growth has analysts concerned, and Wells Fargo and FBR Capital each issued notes to investors today highlighting the recent deceleration in the area.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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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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