A stock thought

[banker6796]

Since I've been talking stocks lately, I purchased Rite Aid today at $8.06. RAD is a stock I haven't really liked over the years, too high on leverage, inferior store locations in a lot of markets, competitive space. I was always more a fan of CVS, but that stock has kind of run it's course for a while IMO. The reason I bought RAD is their announced acquisition of EnvisionRx. This is an acquisition that looks a lot like the CVS acquisition of Caremark 7 or 8 years ago that took CVS from a $28 stock to a $104 stock.

If they do the intergration fairly well I think you could see RAD in the 20s in 3 years. I don't recommend stocks, just sharing my thoughts on one.

 

[MichiganHerd]

We're a large supplier for Rite Aid, and have worked with them for the last 8 or 9 years. We actually thought they were going to fold a few years back. Some still think they might.

They're like our worst client when it comes to paying their invoices.

 

[banker6796]

Like I said, haven't been a fan. Leverage is high, quick ratio is low at .55, but they are in much better shape than a few years ago. I'm drawn by the potential on the acquisition.

 

[herdfan06]

I have own RAD for a number of years, purchased at $1.96 and $1.26, I nearly threw in a few hundred bucks when it was at .40 and the NYSE was threatening to delist them.

 

[banker6796]

I'll do something like that on occasion, and wish I would have done it a few more times. I bought 35,000 of SIRI at $0.61, sold,10,000 at $2.00 to,get my investment back and still hold the rest. The one I really missed on was Fifth Third in late 2008. Could have bought it at $1.18. I was working there at the time and knew it wasn't going under and now it's trading over $18.00. Could have turned $20,000 into $300,000 in 5 years.

 

[herdfan06]

What is your opinion on the recent drop?

 

[banker6796]

Don't pay attention to it. The whole market is going to rumble until they actually carry through with raising interest rates. Like I said, I have a three year expectation on the stock, not a 3 week outlook. Nothing has fundamentally changed since I bought.

 

[herdfan06]

I have held on since 2008, so I am way ahead of when I purchased it. It is interesting that the market responded warmly when they posted low single digit same store YoY results, yet negatively when they posted low single digit YoY results for February, The February number was a little bit below January's.

 

[mu21503]

Originally posted by banker6796:
Don't pay attention to it. The whole market is going to rumble until they actually carry through with raising interest rates. .

There is not a snowballs chance in hell they will or even can raise rates.

 

[banker6796]

Wanna bet?

 

[herdfan06]

Originally posted by banker6796:
Wanna bet?

My money is on Banker.

 

[Penn2moss]

Of course they will go up eventually. People have been saying they are going up soon since 2010. How much longer is it going to be?

 

[banker6796]

June.

 

[mu21503]

Originally posted by banker6796:
June.

Originally posted by banker6796:
June.

Yes June has been reported over and over ad nauseam so let's not pretend that June was your estimation after long study So was 2014,2013 and so on., much like William Millers group in the 1800s that continually predicted the end of the world.
There have been 24 central bank easings this year alone. As a result the dollar index has skyrocketed. The euro is in free fall, it is stunning the rate of decline that a major currency has had. This dollar move will really hurt exporters thus crushing earnings, but then again we will hear about one time write downs due to this. If they raise rates the dollar will move even higher creating more deflationary pressure on a society that functions only on debt. In addition the fed has expanded its own balance sheet by trillions and raising rates could create a nightmare because it could crush their own holdings.
Granted I should not have said ever, but then again the fed has done nothing but blow bubbles and pop them for 30 years with each pop being exponentially worse than the last.

 

[HerdBuckeye]

Why would you even want to mess around with a stock like Rite Aid when there are so many good stocks and healthy companies in the markets now. Ghetto stock....

 

[herdfan06]

Originally posted by HerdBuckeye:
Why would you even want to mess around with a stock like Rite Aid when there are so many good stocks and healthy companies in the markets now. Ghetto stock....

Can you elaborate?

 

[banker6796]

First, to MU, never said it was my prediction, but the fed has been spouting certain benchmarks that must be met before they would raise rates. Those benchmarks will be met by June.

Next, yep, RAD isn't a great company, but you don't make money, not a lot of money anyway, but buying pristine companies in a market like this. You make good money by identifying companies that are in the process of making the correct moves to become better companies. Is RAD that stock, no one knows for sure, but I like the similarities it has to what CVS looked like 7 years ago. It looks like they are following their blueprint and that's actually a fairly well proven path. Walmart was built imitating Kmart, Wendy's was built imitating McDonalds, etc. it matters more where you buy a company in their life cycle than it does what company you buy. Additionally, you don't want to stick 100% of your capital in large cap! blue chip stocks! that's nothing more than a self managed Dow tracking fund.

 

[mu21503]

There is a fed meeting this week. Will they raise rates ? Hell no, but the entire market outlook is completely based on if they use or don't use one word ! Patience
If anyone thinks it is ok to invest based on a single word in a fed statement your insane. But if they say patient then we are if to the races , if they don't watch out.

We are not a free market economy anymore and have t been for years. We are a centrally planned government directed economy that makes communists blush.
This post was edited on 3/17 10:50 AM by mu21503

 

[BT4373]

rad up a little today

 

[huntersdl2007]

Ask your local freemason