Thursday, September 21, 2006

CVS Trade

Today I went long the November 30 call for (CVS). S&P did a discounted cash flow analysis with a weighted cost of capital of 9% and found an intrinsic value of $36 per share. Today's selloff on the Walmart announcement will have little effect on sales at CVS. In my opinion, there is a sense of security getting a prescription filled at a pharmacy over a discount retailer. CVS will lose some customers but not enough to have a significant impact on the bottom line.


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