'Mad Money' Spotlight: Rite Aid Not Right
NEW YORK (
) -- Making some bets on swine flu fears? Jim Cramer says to avoid
Rite Aid
(RAD) - Get Report
.
Drugstores have been taking advantage of the swine flu
, doling out seasonal flu shots earlier this year. And while none of them -- Rite Aid,
CVS Caremark
(CVS) - Get Report
and
Walgreen
(WAG)
-- are currently offering H1N1 vaccinations, Walgreen says more consumers are getting a seasonal flu shot.
According to Walgreen's survey, 50% of consumers plan to get the shot this year compared with 43% last year.
Shares of Rite Aid ran up 32% last week to close on Friday at $2.21 on speculation that the company will be a beneficiary of flu season.
But Jim Cramer said during his "Mad Money" segment Friday that investors should use Rite Aid's rally as an opportunity to buy Walgreen and CVS instead. He says Rite Aid is a "distant third" in comparison to the other two.
"I don't want you to be sucked in here," Cramer said of Rite Aid's seemingly cheap stock price. "These people are serial underperformers."
Cramer advises that investors sell Rite Aid ahead of its quarterly results on Sept. 24.
Rite Aid has been lagging behind the other two drugstores. In August,
its same-store sales slipped 1.9%
, a bigger drop than the 0.6% decline analysts' expected. Walgreen saw a 1.9% increase in same-store sales. CVS does not report monthly sales results.
Walgreen has already administered one million flu shots in two weeks, with each shot costing $24.99.
On Friday, CVS announced a quarterly dividend of 7 cents a share, payable November 3, 2009 to holders of record on October 22, 2009.
Shares of Rite Aid slipped 1% to $2.14 in afternoon trading, while CVS was up 0.6% to $36.22 and Walgreen rose 0.2% to $34.58.
-- Reported by Jeanine Poggi in New York
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