2003 Sales: $32.5 billion
2012 Sales: $72.2 billion2003 EPS $1.13 2011 EPS: $2.64 You've likely noticed that there are a lot more drugstores in your neighborhood than there were a decade or two ago. For many consumers, short trips to the grocery store have been replaced by trips to the druggists, which now stock many items a grocer would anyway. Walgreen (WAG), which operates 7,900 drugstores across the U.S, has been a clear beneficiary of the trend. Sales, operating cash flow and net profits have all risen in lockstep over the years, hitting record levels in 2011. Yet shares, trading at a recent $35, are actually the peaks seen a decade ago. That's because investors fret that growth will invariably slow as the drugstore sector get saturated. However, Walgreen still has a few arrows left in its quiver: The company should continue to benefit from the ongoing migration towards generic drugs (which carry higher profit margins for drugstores). And this is an industry that continues to consolidate: management aims to keep profits growing through the pursuit of accretive acquisitions. Shares, which traded for 35 times trailing earnings back in 2003 now trade for a much more reasonable 13 times trailing earnings.
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