NEW YORK (TheStreet) –U.S. drugstore chain Rite Aid (RAD) raised its outlook for the year and posted fiscal third-quarter earnings that blew away expectations Thursday, sending its shares higher by more than 13% -- growth that's likely to continue, both in the business and its stock, thanks to growth in generic prescription drugs, Obamacare, and an aging America population.
Rite Aid posted a 46.5% jump in fiscal third-quarter profits Thursday, and boosted top- and bottom-line guidance on strength the company attributed to its focus on a wellness model and investments in marketing and promotions.
Investors have plenty of reasons to be excited, not only about this quarter, but also what's ahead in 2015.
Rite Aid is restoring itself back to health by focusing its stores on a model based on wellness. As evidenced by the 5.4% jump in same-store sales growth, that strategy has begun to work. It also suggests that its marketing and promotional investments are paying off.
In July, at its investors conference, the company, which operates roughly 4,500 U.S. stores, outlined ways it can restore growth and better compete with Walgreen's (WAG) and CVS (CVS) . Rite Aid cited the growth in generic prescription drugs, impacts of the Affordable Care Act and an aging America population, constantly in need of healthcare services.
With the company raising guidance in every important metric, Rite Aid has placed the right bets. Likewise, investors looking for growth prescription and potential 20% gains in the next 12 months should consider this company.
For the period ending Nov. 29, the Camp Hill, Pa.-based company said earnings increased to $104.8 million, or 10 cents a share, topping last year's mark of $71.5 million, or 4 cents a share. This beat analysts' mean estimate of 5 cents a share, according to Thomson Reuters.