Walgreen

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As the largest retail pharmacy chain in the country, Walgreen's ( WAG) 7,800 stores reach more Americans than those of its rivals. At the same time, the firm is poised to benefit from one of the biggest trends in the pharmaceutical industry right now: the barrage of patent drop-offs that's threatening drugmakers' revenues for the next few years.

Combined, those factors should help Walgreen shake off the economic headwinds that are blowing its way.

Scale is Walgreen's biggest advantage. Coupled with the patent drop-off issue (which should drive higher margins through the sale of generics), size could mean higher levels of profitability than peers. But what Walgreen's peers lack in scale, they make up for in ingenuity. Rivals such as CVS Caremark ( CVS) have added pharmacy benefits management to their repertoires to take a share of pharmacy sales on two fronts. Walgreen will need to keep up with new offers (such as in-store clinics) if it wants to continue its performance.

On the growth front, one major positive is saturation -- or rather the lack thereof. Despite Walgreen's huge geographic footprint, the company still hasn't reached saturation in the U.S., and it should be able to offer growth to investors for years to come. That's helped by a healthy balance sheet position with ample room to spend cash on growing a capital base.

With analyst sentiment on the rise this week, we're betting on shares ahead of Wednesday's earnings call.

Walgreen, one of the highest-yielding retail stocks, shows up on a recent list of 10 Stocks Gloomy Goldman Sachs Is Bullish On.

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