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[video] Jim Cramer Quick Take: How to Play CVS Kicking the Tobacco Habit

NEW YORK (TheStreet) -- CVS Caremark (CVS) has decided that it will no longer carry tobacco products in its stores. The company reasoned that by not carrying harmful products, it will increase the odds of signing deals with medical groups and insurance companies. 

"I applaud the decision of CVS to drop tobacco," said TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio manager. However, he's in the business of caring more about earnings per share. So Cramer is concerned many of CVS' customers will head over to Rite-Aid (RAD) instead.

Rite-Aid has had some very good quarters and has been aggressively pushing its private-label products, Cramer said. Another beneficiary could be Walgreen (WAG)

Cramer also suggested that investors look at Dollar General (DG), which introduced tobacco products last year. While the products have created poor gross margins for Dollar General, it's what the industry refers to as a "loss leader," or a product used to get customers in the door to buy other products. 

CVS said the decision may initially cost the company $2 billion in annual revenue, leaving Cramer to conclude that investors may want to shift to these other companies. 

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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