Who would have thought CVS Caremark (CVS) was a 15% grower? During the last decade profit growth has averaged 14% a year and the stock has compounded at 16% a year. CVS is also growing faster now, which is pushing the stock up quicker than in the past. This conservative stock is one to get into, but its high right now, so bide your time.
One Year Chart
I should have bought CVS in the beginning of the year. At least when it broke out at $50. Today the stock is $59 (data for this article is as of May 13th when CVS was $58).
Profit growth has been over 20% in each of the past four quarters, and since the company has been beating the street that could continue throughout the rest of the year. At 15 times earnings CVS is reasonably priced. The stock also pays a dividend of around 1.5%.
Fair Value
I feel CVS is worth 16 times earnings, and has decent upside here. Since the market — and this stock — have been on a roll without a correction, I think its best to sit on the sidelines and wait for a better buying opportunity.
Sharek’s Take
CVS Caremark is one of the most conservative stocks in America. It’s also a company with the ability to grow its stock 15% per year over the long term. If 15% is good enough for you, you’re welcome to get some. I’ll choose to bide my time and see if I can get in at $53 which would give us 2013 upside 20%.
View the Earnings Table here.View the Ten Year Chart here.
