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
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?