Rite Aid's Turn Is for Real
This column was originally published on RealMoney on June 22 at 9:59 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.
Don't abandon
Rite Aid
(RAD) - Get Rite Aid Corporation Report
. The turn is for real. Next week, we will have
Walgreens
(WAG)
report, and I think after it does, you will see Rite Aid in a better light. Why the turn? Because Rite Aid still reflects bankruptcy risk, and that's a mistake. Its viability is no longer in question and it reaffirmed earnings per share guidance and
raised
revenue guidance. This company still has a monster amount of revenue: $17 billion.
Plus, Rite Aid did have positive same-store growth of 3.6%; not bad for a company that used to have nothing like that.
I just have to believe you can win two ways with this one. You could get a takeover, and in the meantime it could percolate along on its own. It is true that the stock is up 31% this year versus a much more muted 13% gain for
CVS
(CVS) - Get CVS Health Corporation Report
and a slight decrease for best of breed Walgreens. But year over year, Rite Aid's stock has gone
down
TheStreet Recommends
10%, even though the viability is now clear. That seems wrong to me.
This stock suffers from
Computer Associates
-itis. Some people think it is forever corrupt, even though all its people are new. Sure, the expenses were a little high, so margins went down -- heck, only by about a half of a percentage point. But that can be fixed. Remember when that happened for
Best Buy
(BBY) - Get Best Buy Co. Inc. Report
last year and when it got it together? You caught 10 points.
On a percentage basis, I think Rite Aid can pull it off, too. And if it can't, unlike Best Buy, someone else will.
At the time of publication, Cramer had no positions in the stocks mentioned.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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