Rite Aid Corp.
) achieved a new 52-week high of $3.30 on Aug 2, 2013, thereby
beating its previous high of $3.21 on Jun 14, and eventually
closed trade at $3.27. The average volume of shares traded over
the last 3 months was approximately 23,299K. Moreover, the
company currently trades at a forward P/E of 20.4x, a 28.1%
premium to the peer group average of 15.93x.
We believe that the strong price appreciation is primarily
attributable to the company's comparable-store sales growth for
the month of July. Apart from this, consistent positive earnings
in the past three quarters were a tailwind.
Rite Aid, which witnessed declining sales and weak bottom-line
results in the recent past, is now showing signs of improvement,
thanks to the company's cost reduction initiatives and
improvement in store-level performance.
Rite Aid reported a quarterly profit for the third straight
quarter in Jun 2013. Moreover, this Zacks Rank #3 (Hold) company
has outperformed the Zacks Consensus Estimate four times in the
trailing five quarters.
Rite Aid applied additional resources such as the Wellness+
customer loyalty program and the Flu Immunization program to
boost customers' demand amid the challenging macroeconomic
environment. The company's Wellness+ customer loyalty program has
been successful in attracting customers. This is evident from the
fact that Wellness+ members in fiscal 2013 contributed to 79% of
front-end sales, compared with 68% in fiscal 2012.
On the cost front, the company is focusing on generating cost
savings through centralized indirect procurement of drugs and
reduction in supply chain costs. We believe that these programs
and initiatives will facilitate the company to increase its
customer base and generate long-term profitability. Our stance is
supported by Rite Aid's strong performance in the past three
Other stocks that touched new 52-week highs on Aug 2, are
Best Buy Co.
Dean Foods Co.
), which reached $202.34, $31.33 and $11.31, respectively.
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