Personally I tend to look at a stock when it’s fallen from favor. WAG is trading at new lows, while SGP is trading a new highs.

Right now I think SGP is the “safer” bet. International exposure, and they cover the pharma market a level higher than WAG does.

I think Walgreen’s 24/7 operation offers a big advantage.

Walgreens doesn’t consider Wal-Mart a major competitor. They’re more concerned with CVS/Caremark. I guess WMT could be considered a major retailer, or food & drug store, offering pharmacy as a portion of their “other” business (e.g. Kroger, Safeway, Publix, Target, etc.).

Wal-Mart could take some business away from Walgreens because of their newly introduced loss-leader pricing (Target & Publix too). However, for those with multiple medications and chronic conditions, and for those who travel, Walgreens offers much better services. Walgreens can “easily” transfer prescriptions throughout the country through their state-of-the-art computer systems, at stores conveniently located “everywhere” and accessible at “anytime”, and with convenient drive-thru services.

Judged by their prescription counts, the public sees this as an advantage too.

When an emergency happens, at any time of the day, there’s always a Walgreens store close by where you can consult with your pharmacist for free and buy any needed emergency Rx or OTC products. I guess if Wal-Mart decides to offer such conveniences, then maybe Walgreens will start to worry.

Also, like CVS/Caremark, Walgreens offers a discount mail-order service, home health, and DME services. However, CVS/Caremark now has a bigger presence. However, I’ll bet Walgreens probably has some type of hidden M&A activity in the works in this area (Humana?, Express Scripts?).

Walgreens is also a drug store chain managed and operated by pharmacists. Can’t say that about Wal-Mart, Target, the food & drug stores, and even Rite-Aid (CEO isn’t a pharmacist). This is important to many pharmacists and makes a big difference in recruitment and retention.

Just my take on it..

Disclosure: I don’t currently work for Walgreens or any of the companies mentioned.

BTW, I think SGP would be a good investment too.

I completely agree that we’re due for a recession, and there is still a lot of denial in the market that this is right around the corner.

How much of an advantage do you think the 24/7 operation has over the Wal-Marts who aren’t open around the clock? I agree, there is a competitive advantage, so long as the increase in overhead is offset by after traditional hours sales.

I’ve liked the pharma industry for a long time, but haven’t taken the leap forward yet. Still considering SGP, but am still doing research on them.

-Grant

Being a pharmacist and individual investor, I worked for almost all of the chain pharmacies and researched their financials/business models on my own.

Walgreens, by far, leads the pack in every aspect. IMO, as consolidation continues in this sector, Walgreens will continue as “the” top drug retailer, with only one or two competitors being left over time.

Some may argue that CVS, now being merged with American Drugs Stores, Eckerd and Caremark, is a better investment than Walgreens, but IMO, they are not even “close” to being as well-managed or electronically and politically sophisticated as WAG.

Some may also argue that Wal-Mart is a better play, but Wal-Mart pharmacies aren’t open 24 hours and they don’t have stores conveniently located on just about every corner. Wal-Mart also has a hard time recruiting and retaining pharmacists.

Rite-Aid? Fuggetaboutit!

WAG (along with all other drug chains) has been negatively-impacted with the recent Medicare Part-D reimbursement rates, hence the lower earnings. I wouldn’t view their earnings shortfall as a company problem, but an industry problem. It will affect everyone.

You probably know that I’m awaiting a predicted recession, so WAG may fall to even lower levels if that happens. But if you disagree with my prediction, now would be a good time to buy WAG since it dropped in price because of it’s unusual earnings miss.

I’d though of JNJ, P&G, etc… but I hadn’t thought of the local retail aspect of that sector (like Walgreens).

What do you like in WAG? The 3-year chart has been fairly volatile, but it appears that the stock is at the low end of the trading range, emboldened by downgrades from investment houses after WAG reported their first earnings decline in a decade…

Stock picking is a zero sum game for just about everyone. Sure, you will pick some winners, but you will also pick losers. And, after transaction costs (and taxes for taxable accounts), you will probably find you didn’t top the market.

Plus, by tracking the market, you free up time for the important things in life, rather than following the news and movements of individual positions.