Walgreen's Wonderful Comps

Walgreen (NYSE:WAG) reported its January same-store sales figures a couple days ago, and, although I am no clairvoyant, I am going to go out on a limb and predict that Fools who own shares in this company are sporting a grin of satisfaction at the numbers and the prognosis they imply.

To begin with, sales in total for the first month of 2005 came in at $3.466 billion compared with $3.031 billion in January 2004, representing growth of 14%. Here's the crux, though: Same-store results showed an even 10% increase. Something certainly was going on at Walgreen last month (as opposed to nothing) -- and that something was a lot of green being collected at the points of sale.

Good news from this retail pharmacy is becoming a bit of a bore by now (oh, I can hear the collective angry musings out there, in hissing tones, screaming this warning on some telekinetic wavelength: Don't jinx it, you idiot!). In fact, I wrote about comps figures for Walgreen's September 2004 frame and found them to be close to 10% then (the actual number was 9.3%). I also wrote about the June sales results last summer: Once again, the company scored.

Walgreen obviously is in the midst of a solid trend of sales growth. The stock also has been growing the past 52 weeks, as its chart shows. Long-term investors who want to be in this space have two biggies to choose from: the subject of this piece (naturally), as well as CVS (NYSE:CVS). Rite Aid (NYSE:RAD) has been having a difficult time getting its business back on track, and its stock reflects the negative outlook. For an example of some of the challenges Rite Aid has faced, check out a recent Take written by Nathan Slaughter.

So, the moral of the story -- at this time, at least -- is to stay away from the more speculative Rite Aid and take a look at either CVS or Walgreen. Let me say this, however: Trends are indeed made to be broken. Remember that fundamentally sound companies do nevertheless stumble and cycle as the years go by. I showed you a one-year chart of Walgreen earlier -- how about a three-year chart? A little more volatile, eh? That's OK, though -- volatility is the companion of the long-term-investing sojourner. Just make sure you bring along one other companion on the journey -- Mr. Dollar Cost Average. He'll always be at your service.

For more information on the drugstore industry, see:

• CVS's Shot in the Arm
• Rite Aid Still Needs First Aid
• Walgreen Seeing Green
• Rx: Get Some Earnings Quick
• Drugstore: Where's the Cash?

Fool contributor Steven Mallas owns none of the companies mentioned. To get involved with the Foolish conversation on Walgreen and its competitors, head on over to the company's discussion board.