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Sometimes stocks stay in the single digits for so long that they become tempting buys. But you should curb the urge to buy long enough to do some careful research. Sometimes a low stock price creates opportunity, but more often than not, the stock is down because the market is pricing in realities that have yet to surface.

The latter appears to be what's happening with the country's third largest drug-store chain, Rite Aid ( RAD). The retailer has a colorful history of corrupt insiders and shady accounting and it now finds itself trying to generate sustainable growth following a round of industry consolidation.

Rite Aid shares rallied 33% over the past year but have slid 26% in 2004 since hitting their December highs. Investors had speculated the company could be the next takeover target after J.C. Penney's Eckerd division was sold to CVS ( CVS) and a Canadian drug store chain, and Duane Reade ( DRD) was bought out by a group of private investors.

An acquirer has yet to come calling for Rite Aid, and with investors focused solely on the company's business prospects, the future does not look as bright as it once did.

In all fairness, management has tried to improve the business, but has fallen way short of its competitors. Rite Aid's total sales grew 5.1% in fiscal 2004, up from 4.1% top-line growth in fiscal 2003. Compare this to CVS, where sales increased 10% in 2003, and WalGreen ( WAG), which reported a sales increase of 13% for the same period, and the differences in growth are obvious. One-time events like the grocery strike in California and the strongest flu season in years contributed to Rite Aid's sales increase, and the company did say it managed to hold on to a large share of the business it grabbed from the strike.

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