In The Cabot Benjamin Graham Value Letter, an exceptional service that picks stocks meeting the criteria of the legendary investor, J. Royden Ward looks at CVS Caremark (NYSE: CVS).
"CVS Caremark recently reported solid third quarter sales and earnings. Sales increased 18% and EPS rose 8%, meeting our forecast.
"The company's October 2008 purchase of Long's Drugstores is well ahead of schedule and producing better than expected results.
"The company's Caremark pharmacy benefit management division, however, lost several large contracts to competitors.
"CVS expects the Caremark problems to continue in 2010, although the company is taking aggressive measures to win new contracts and retain old business. We believe the problems at Caremark are short-term and will be solved quickly.
"CVS also reported that the Federal Trade Commission is investigating the company's business practices. We believe the investigation will be inconsequential and will not harm CVS's fine reputation. Therefore, we view the current weakness in CVS shares as an outstanding buying opportunity."
