Very OT: CVS

CVS, purchase of Aetna, possible Amazon entry into prescriptions, and for various other reasons the stock from $115 in 2015 steadily declined to $52 in 2019. CVS through all this continued to execute, made management changes, found a way to integrate Aetna, and introduced in-store clinics, etc.

The stock tested that low 50’s bottom in early 2019 and late 2020.

Now the stock is above $100, From early 2019, march 2020 and Nov 2020. Investors had multiple opportunity to get in at the bottom price. Any how CVS is expected to produce $10 B FCF (after paying $2 dividend), so they can pay down their debt (they already reduced it from $75 B to $58 B) and buyback stock and invest in the business. That is, in the next 3 years they can easily produce over $30 B FCF and should have over $10 B for buybacks, and $10 B for reducing the debt and $10 B for M&A and other investments.

The dividend yield has gone down to 2% due to price appreciation, but I think the stock has potential to provide 10% to 15% CAGR return over next 3 years. If they don’t do any M&A, they can reduce debt and buyback more. Most of their investment cycle is over and only maintenance cap-ex is expected.



Thank you for this OT.




yw, Today at some point CVS was the only name in green.

yw, Today at some point CVS was the only name in green.

Actually DLTR was showing some nice weighing machine resilience today. Go baby!