Drugstore Trade: Sickly Or On The Mend?

Over the past 6 months shares of CVS are down about 5%, while rival Rite Aid is down 22%. Should you swallow hard and buy?

CVS reported its quarterly results Monday. Here's how its latest quarter compares with its two biggest rivals.

CVS

In the fourth quarter ended Dec. 31, CVS Caremark Corp. posted a profit of $1.05 billion, or 74 cents per share, on revenue of $25.82 billion. CVS said $14.46 billion in revenue came from its drugstores. Profit topped expectations, but revenue came in slightly shy.

Rite Aid

In its fiscal third quarter, which ended Nov. 28, Rite Aid Corp. narrowed its loss to $86.1 million after paying preferred dividends, or 10 cents per share, on $6.35 billion in revenue. The results beat Wall Street expectations.

Walgreen

In its fiscal first quarter, which ended Nov. 30, Walgreen Co. reported a profit of $489 million, or 49 cents per share, on revenue of $16.36 billion. The results beat analysts' average estimates.

Considering the latest numbers, what’s the trade?

I'm bullish CVS and Walgreen, says Thomas Weisel analyst Steven Halper. CVS can grow margins through its PBM business while Walgreen can grow its margins through controlled growth.


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On February 8th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (BTU), (GS), (INTC), (NUE), (MSFT); Kaminsky Is Short (LULU); Najarian Owns (AAPL) Call Spread; Najarian Owns (GILD) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (TCK), Is Short (TCK) Calls; Najarian Owns (XLF) Calls; Najarian Owns (CLF) Call Spread

For Dennis Gartman
Funds Managed By Dennis Gartman Are Long Australian Dollars, Canadian Dollars
Funds Managed By Dennis Gartman Are Short British Pound Sterling, Euro,
Swiss Franc
Funds Managed By Dennis Gartman Own (BWLD), (DRI), (PNRA)
Funds Managed By Dennis Gartman Are Short (MT), (NUE), (PEP)

For Brian Kelly
Kanundrum Capital Owns (HOV)
Kanundrum Capital Owns (PHM)
Kanundrum Capital Owns (TOL)
Kanundrum Capital Owns (WY)
Kanundrum Capital Owns (PCL)
Kanundrum Capital Owns (RYN)
Kelly Owns (HOV) Calls
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short U.S. Dollar
Kelly Owns (FXE) Puts

For Tim Seymour
Seygem Asset Management Owned (MTL) On 2/3/10
Seymour Owns (AAPL)
Seymour Owns (BAC)
Seymour Owns (EEM)
Seymour Owns (ETFC)
Seymour Owns (F)
Seymour Owns (INTC)
Seygem Asset Management Is Short (VALE)
Seygem Asset Management Owns (GFI)
Seygem Asset Management Is Short (BIDU)
Seymour Owns (FXI)


CNBC.com with wires