Investing

What did you buy? What might you buy??

  • Last Updated:
  • Aug 17th, 2018 12:26 pm
Tags:
None
Jr. Member
Mar 6, 2017
152 posts
90 upvotes
Why is Costco dropping so much after beating earning expectation?
Deal Expert
User avatar
Sep 19, 2004
21556 posts
3759 upvotes
Waterloo
walukupix wrote:
Oct 6th, 2017 11:34 am
Why is Costco dropping so much after beating earning expectation?
because this market is crazy
NFLX/TSLA would run UP on any good/bad news :P

Costco drops on concerns over renewal rates - Costco Wholesale Corporation (NASDAQ:COST) | Seeking Alpha
https://seekingalpha.com/news/3299787-c ... ewal-rates
Which Credit Cards to sign up? >> Jerry's List of Credit Cards with $200+ Welcome bonus/Aeroplan & AMEX Churning FAQ
AMEX Personal 60K || Business Platinum 75K || Biz Gold 40K || SPG 20K
Deal Addict
Dec 3, 2014
1207 posts
268 upvotes
Ontario
jerryhung wrote:
Oct 6th, 2017 3:49 pm
CVS/WBA or retail (COSTCO and etc...) are getting killed by AMZN or AMZN rumors (possibly entering regulated pharmacy), AGAIN, for the Nth time
Either the drops in these retailers are dramatically overdone or Amazon is a huge buy right now because Amazon is still off 52 week highs and has been since July 26th despite a slew of positive Amazon news since that time.
Deal Addict
User avatar
Mar 16, 2010
2203 posts
919 upvotes
Burlington
walukupix wrote:
Oct 6th, 2017 11:34 am
Why is Costco dropping so much after beating earning expectation?
Concerns about renewal rates which make up about 75% of costcos revenue.
Sr. Member
Oct 9, 2001
863 posts
147 upvotes
Toronto
NFLX and AMZN mulitiples are rediculous. GOOG and AAPL seem like value stocks in comparison. At one point this market has to get it right.
Deal Expert
User avatar
Sep 19, 2004
21556 posts
3759 upvotes
Waterloo
CVS/WBA at multi-year lows, after dropping like -10% in 2 days
Debating if I should add more on this AMZN news/rumor

Geez, how many things can AMZN kill - Retails, Pharmacy

while WMT is standing alone, new 52w high (+2% today)
Which Credit Cards to sign up? >> Jerry's List of Credit Cards with $200+ Welcome bonus/Aeroplan & AMEX Churning FAQ
AMEX Personal 60K || Business Platinum 75K || Biz Gold 40K || SPG 20K
Deal Addict
Nov 9, 2013
2295 posts
957 upvotes
Edmonton, AB
jerryhung wrote:
Oct 9th, 2017 12:16 pm
CVS/WBA at multi-year lows, after dropping like -10% in 2 days
Debating if I should add more on this AMZN news/rumor

Geez, how many things can AMZN kill - Retails, Pharmacy

while WMT is standing alone, new 52w high (+2% today)
Selling: PII
Adding to: CVS

If AMZN does move into the pharmacy business it'll buy a company to do so - I can't see it starting from scratch. The pharmacy business is a low margin, high regulation business that is going to be difficult to gain market share in.

Tonight at thanksgiving dinner I'm going to ask my great great aunt - who is 94 - if she would switch from her local pharmacy to Amazon. What will her answer be?

Grocery stores are easier to disrupt - everyone of all ages needs to buy food. Who did they target with the Whole Foods acquisition? The users of their online stores - millennials. How is Amazon going to get those who are on long term prescription medications - i.e.the elderly - the bread and butter of the pharmacy business? It'll have to acquire a customer base (by buying a company).

CVS is probably worth about ~$100 so it's trading at a 25% margin of safety. It's a dominant player with omnichannel offerings that is continuing to grow revenues and earnings. So worst case scenario, even if AMZN does enter the space (say by acquiring a smaller competitor) it would have to steal customers away from a company like CVS to grow it's sales. Will my 94 year old great great aunt switch from her pharmacy to Amazon? Would your great great aunt / grandmother / grand father etc? I would bet no.

If AMZN doesn't enter this space then in the long term it's all upside. Asymmetrical risk / reward in my opinion.

Also, as an side, wouldn't it be prudent for AMZN management to see how things go in a low regulation, low margin business (grocery retail) before stepping up the difficulty and going into a high regulation, low margin business?
Sr. Member
Feb 26, 2017
674 posts
290 upvotes
treva84 wrote:
Oct 9th, 2017 2:13 pm
Selling: PII
Adding to: CVS

If AMZN does move into the pharmacy business it'll buy a company to do so - I can't see it starting from scratch. The pharmacy business is a low margin, high regulation business that is going to be difficult to gain market share in.

Tonight at thanksgiving dinner I'm going to ask my great great aunt - who is 94 - if she would switch from her local pharmacy to Amazon. What will her answer be?

Grocery stores are easier to disrupt - everyone of all ages needs to buy food. Who did they target with the Whole Foods acquisition? The users of their online stores - millennials. How is Amazon going to get those who are on long term prescription medications - i.e.the elderly - the bread and butter of the pharmacy business? It'll have to acquire a customer base (by buying a company).

CVS is probably worth about ~$100 so it's trading at a 25% margin of safety. It's a dominant player with omnichannel offerings that is continuing to grow revenues and earnings. So worst case scenario, even if AMZN does enter the space (say by acquiring a smaller competitor) it would have to steal customers away from a company like CVS to grow it's sales. Will my 94 year old great great aunt switch from her pharmacy to Amazon? Would your great great aunt / grandmother / grand father etc? I would bet no.

If AMZN doesn't enter this space then in the long term it's all upside. Asymmetrical risk / reward in my opinion.

Also, as an side, wouldn't it be prudent for AMZN management to see how things go in a low regulation, low margin business (grocery retail) before stepping up the difficulty and going into a high regulation, low margin business?
I think that's a good price for CVS. The fundamentals are strong (20% dividend growth and a 29% payout ratio). I think it would take Amazon years to build a presence in the industry. have a full position I bought for around 80 earlier this year. I don't like owning a retail stock but I have to think CVS will rebound at some point.
Deal Addict
Dec 3, 2014
1207 posts
268 upvotes
Ontario
Chance7652 wrote:
Oct 9th, 2017 3:41 pm
I think that's a good price for CVS. The fundamentals are strong (20% dividend growth and a 29% payout ratio). I think it would take Amazon years to build a presence in the industry. have a full position I bought for around 80 earlier this year. I don't like owning a retail stock but I have to think CVS will rebound at some point.
Also agreed. CVS is a no brainer here. I have a full position ($79.51 ACB), otherwise would buy more
Deal Fanatic
User avatar
Oct 9, 2008
5212 posts
1672 upvotes
Thornhill
jerryhung wrote:
Oct 9th, 2017 12:16 pm
CVS/WBA at multi-year lows, after dropping like -10% in 2 days
Debating if I should add more on this AMZN news/rumor

Geez, how many things can AMZN kill - Retails, Pharmacy

while WMT is standing alone, new 52w high (+2% today)
Wait until at least 5% yield+ imho on CVS/WBA then the market will pay attention to these again. Same story with Walmart when I first started my position just over a year ago , it was marked for dead due to competition for Amazon and was sporting 7% yield at one point...

The market has been incredibly 'dumb' this year, just be patient and selective. Algorithms are funneling MM's into risky territory ie: tech sector all year and they're dumping some stalwarts to chase performance.
Deal Addict
Jun 27, 2007
3819 posts
791 upvotes
PBMs are high margin businesses. Main players are ESRX, UNH and CVS.
WBA was not a PBM until they launched business with Prime Therapeutics in Apr 2017. They are, effectively, the forth major player.

AMZN will have to compete with the above 4 undercutting competition. Consumers are unlikely to see much savings, but insurance companies should be able to save a bundle.
Looking at AET, CI, ANTM, HUM. Or, just buy UNH when it tests 50 MA near 170.

edit: spec option could be to buy RAD. AMZN might purchase them to get physical retail locations. Stock is below $2 with enterprise value around 9B (pretty high)
After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!

Top

Thread Information

There are currently 3 users viewing this thread. (2 members and 1 guest)

membrs, greg123