How Rite Aid Stock Soared 318% in 2013http://www.fool.com/investing/general/2013/12/06/how-rite-aid-stock-soared-318-in-2013.aspx Dan Caplinger
December 6, 2013
Drugstore chain Rite Aid (NYSE: RAD) gave shareholders extremely impressive returns in 2013, with the stock climbing 318% since January. Despite strong competition from Walgreen (NYSE: WAG) and CVS Caremark (NYSE: CVS), Rite Aid now trades at its highest level since 2007. Let's take a closer look at the company to discover why the stock climbed so high and whether Rite Aid looks poised to continue gaining ground in 2014 and beyond.
What pushed Rite Aid higher
But things started going right for Rite Aid this year. After posting its first annual profit in seven years during fiscal 2013, Rite Aid has continued to remain profitable, reporting positive earnings for the fourth consecutive quarter in its report for the three-month period ended in August. That report defied investor expectations for a quarterly loss, with Rite Aid pointing to the introduction of more generic drugs as well as cost-cutting on general and administrative expenses as helping it keep margins up. A 1.7% increase in same-store pharmacy sales points to the renewed strength the business has seen, and the company gave positive guidance for the remainder of its current fiscal year.
So far, bearish predictions that Rite Aid would have to give up its impressive gains haven't panned out. The initial fear was that Rite Aid's success had stemmed from Walgreen's dispute with pharmacy benefits manager Express Scripts, which had led many Walgreen customers to defect to its competitors. Once Walgreen resolved that dispute, it sought to get those customers back from CVS and Rite Aid. But even though same-store sales results reflected some of Walgreen's efforts early in the year, they haven't kept Rite Aid from making money.
Stats on Rite Aid