4-Star Stocks Poised to Pop: CVS Caremark

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drugstore and pharmacy benefits giant CVS Caremark (NYSE: CVS  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at CVS Caremark and see what CAPS investors are saying about the stock right now.

CVS facts

Headquarters (Founded)	Woonsocket, R.I. (1892)
Market Cap	$46.3 billion
Industry	Drug retail
Trailing-12-Month Revenue	$101.16 billion
Management	CEO Larry Merlo (since March 2011) CFO David Denton (since January 2010)
Return on Equity (Average, Past 3 Years)	9.7%
Cash/Debt	$2.2 billion / $11.1 billion
Dividend Yield	1.5%
Competitors	Rite Aid (NYSE: RAD  ) Walgreen (NYSE: WAG  ) Wal-Mart (NYSE: WMT  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 1,688 members who have rated CVS believe the stock will outperform the S&P 500 going forward. These bulls include headyinvestor and seekingyield.

Late last month, headyinvestor tapped CVS as a relatively strong way to get into the drug store business:

Clearly a better operation than Rite-Aid and Walgreens. Better financials, better stores, broader revenue base (Caremark business). Pharma is going the way of generics and CVS will be there to cater to them. Amazing financials.

Over the past five years, in fact, CVS has grown its top line at a brisk rate of 21% annually. That's much faster than rivals Rite Aid (8%), Walgreen (9%), and Wal-Mart (5.5%).

CAPS member seekingyield elaborates on the bull case:

CVS is currently running a very good retail operation, and a not so good PBM business since its takeover of Caremark a few years ago. This marriage has not yet worked out as management had envisioned, however, there is at least potential that this relationship smoothes out and the PBM and retail businesses begin firing at the same rate. There is a logical fit between these businesses and a turnaround in PBM should result in significant outperformance by the stock as CVS currently trades well below the valuation of peers.

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