Today I want to talk to you about two companies that are
benefiting from growing interest in electric vehicles. The first
, which partnered with
NRG Energy (
in November to install high-powered rapid charging stations for
electric vehicles at 18 Walgreen locations in Houston, Texas. The
first station in set to be installed next month.
The second is
General Motors' (
, which announced this week at the Detroit Auto Show that it
plans to produce more plug-in hybrid vehicles based on its
Initial estimates show that General Motors could build 25,000
Volts next year, more than double its original estimate of 10,000
vehicles, indicating that demand for plug-in hybrid vehicles is
growing. The Volt was even named the North American Car of the
Year at the auto show.
This focus on electric vehicles bodes well for both Walgreen and
General Motors. First, let's discuss
Walgreen is a Cabot Benjamin Graham Value Letter stock, which
means its best suited for investors who are looking for steady,
long-term growth. (In addition to its push into the electric
vehicle market, Walgreen is also poised to benefit from the large
population of aging Baby Boomers.) Editor Roy Ward featured the
stock in his newsletter almost a year ago writing this:
Is it Undervalued?
The company's stock price increased just 26% during the past
decade while earnings and dividends more than tripled. We believe
the company's stellar performance will now be rewarded and push
WAG shares to our Minimum Sell Price within the next one to two
Walgreen, founded in 1901, is the largest drug store retailer
based on sales. In addition to 7,000 drug stores, the company
operates 680 health clinics within existing stores and on
employer worksites. Walgreen's clinics offer primary and acute
care, pharmacy and disease management services, and health and
fitness programming. The company's strategy of continually adding
new stores and renovating old stores rather than acquiring
smaller competitors has led to steady, reliable growth for
Same store sales increased by 4.9% in October 2009 and 3.9% in
November 2009. New management is renovating existing stores,
cutting operating costs and improving customer service. The
dividend yield is 1.5% and growing.
Walgreen operates over 8,000 drugstores in all 50 states and has
shown strength even during the recent recession, with sales
growing 6%-10% in 12 of the last 13 quarters. Analysts see
Walgreen having a 20% increase in fiscal 2011 earnings to $2.61
per share and another 15% gain in 2012.
And with all those new electric vehicles on the road, Walgreen is
sure to see a boost from its charging stations. Walgreen is still
listed as a buy under 36.60 in the most recent issue of Cabot
Benjamin Graham Value Letter and Roy recommends holding until the
stock reaches his Minimum Sell Price of 56.03.
, which hit some major speed bumps during the Great Recession,
but has rebounded nicely in the last several months. After
climbing back from a bailout by the U.S. government, the company
had its stock re-listed in mid-November. Here's what Mike Cintolo
had to say about it in a recent issue of Cabot Top Ten Weekly:
"General Motors may trace its roots back more than a century, but
all for intents and purposes it's an entirely new company (albeit
a very large one, with about $140 billion in annual revenue).
Gone are the Saturn, Saab, Pontiac and Hummer brands, as well as
loads of debt and some commitments to the union. And being
combined with that leaner corporate structure is a big pickup in
business as the auto sector recovers from the Great Recession
(annual auto sales dipped to their lowest level in 30 years in
early 2009); sales for GM's core brands were up a big 16% in the
month of December, and management expects sales to continue to
chug along this year. We also like the recent news that GM will
be selling its OnStar system at retail, for installation in any
car, a smart move. Earnings are expected to reach $4.20 in 2011,
up from less than $3 last year, but even that projection could be
mightily conservative as any spike in sales is likely to fall
right to the bottom line. We think this is a big turnaround story
"GM came public in mid-November and proceeded to etch a tight
six-week IPO structure between 33 and 36. The breakout came
during the last week of 2010, and the buyers haven't let up
since-shares have advanced nine days in a row on big volume as
institutional investors built positions. Is GM going to double or
triple from here during the next couple of months? Almost
certainly not. But we think big investors will be accumulating
shares on any weakness as business improves."
Learn more about WAG and other strong value stocks featured in
Cabot Benjamin Graham Value Letter.
Learn more about GM and other leading growth stocks featured in
Cabot Top Ten Weekly
In this week's Stock Market Analysis Video, Cabot Market Letter
Editor Mike Cintolo says that from a top down perspective, not
much has changed with the market as the indexes remain in firm
uptrends. He says that the real story is underneath the surface
and lies with the big-cap growth leaders. Stocks discussed
), OpenTable (
), Google (GOOG), Las Vegas Sands (LVS), Amazon (AMZN), Brigham
Exploration (BEXP), Continental Resources (CLR)
Click to watch the video!
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Until next time,
Editor of Cabot Wealth Advisory
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