CVS Posts Robust Earnings - Compelling Long-Term Buy

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

CVS Health Corporation (NYSE:CVS) is fresh off reporting earnings for FYQ2 with beats on both the top and bottom line. EPS came in at $1.33 with revenue coming in at $45.69 billion, beating by $0.02 and $320 million, respectively. Since reporting earnings, the stock hasn’t moved as much of the pessimistic narrative was priced into the stock. Since its high of $112 in 2015, a slew of issues negatively impacting its growth and marketplace have plagued the stock. Firstly, the political backdrop was a significant headwind for the entire pharmaceutical supply chain from drug manufacturers to pharmacies/pharmacy benefit managers (i.e., CVS and Walgreens (WBA)) and the drug wholesalers in-between (i.e., McKesson (MCK), Cardinal Health (CAH) and AmerisourceBergen (ABC)). Secondly, marketplace trends forced CVS to cut guidance for Q4 2016 and the full-year 2017 numbers. CVS stated that “unexpected marketplace actions that will have a negative impact on our Q4 2016 results and a more meaningful impact on our outlook for 2017”. Thirdly, CVS lost a contract with the Department of Defense which carries tens of millions of prescriptions on an annual basis. A new restricted network relationship between Prime Therapeutics and Walgreens impacts CVS Pharmacy’s participation in selected fully-insured networks in several key states, and many cases make CVS Pharmacy a nonpreferred provider for Medicare Part D as well. These prescriptions tend to be the most profitable prescriptions as well. Lastly, Amazon’s purchase of Whole Foods and behind the scenes moves in the healthcare space has incited rumors that Amazon is looking to gain entry into the pharmacy area via leveraging the Whole Foods physical foot print of store fronts. I’ve written several articles contending that CVS presents a compelling investment opportunity in the ever expanding healthcare space. My investment thesis was based on an aging population and growth in long-term care facilities and the pharmacy benefit management segment. All of this in a backdrop of CVS being highly acquisitive, continuing to deliver robust earnings growth, revenue growth, growing dividends and has an aggressive share buyback program in place. It’s a matter of time before CVS will trend higher and in the meantime, investors will be paid to wait via dividends and share buybacks. The wildcard may be the Amazon threat with its first real pivot after acquiring Whole Foods with subsequent potential in entering the pharmacy space as well. Continue reading "CVS Posts Robust Earnings - Compelling Long-Term Buy" →

Market Higher After Yellen Speaks At Jackson Hole

Posted on by The INO.com Team

Hello Traders everywhere. Reforms put in place after the 2007 to 2009 crisis have strengthened the financial system without impeding economic growth, and any changes to these rules should remain modest, Federal Reserve Chair Janet Yellen said Friday in her fullest defense yet of the regulations enacted after the Great Recession.

“The balance of research suggests that the core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth,” the Fed chair said at an annual central bank research conference.

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However, Yellen did not mention monetary policy in her prepared remarks, disappointing some investors who had hoped she might offer hints on the Fed’s path on interest rates.

U.S. stocks rose, and the dollar fell, while Treasury yields dipped slightly.

Key levels to watch next week: Continue reading "Market Higher After Yellen Speaks At Jackson Hole" →

Peak Oil Demand Season is Coming To A Close

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Peak demand for crude at refineries and for products to consumers is drawing to a close this season. Together, they caused total U.S. oil inventories to drop by 49 million barrels from their peak in the week ending June 9th. Total U.S. oil inventories stand at 1.304 billion barrels in the week ending August 11th, 58 million barrels lower than a year ago.

Refinery demand for crude oil set a new record high this summer, as the 4-week trend reached 17.458 million barrels per day, 4.4% higher than last year. As depicted in the graph below, refiners will soon be dialing back their operations for maintenance, and this will reduce the demand for crude at U.S. refineries by about 1.5 mmbd.

U.S. Crude Input to Refineries

Domestic demand was relatively strong this summer, up about 2.0% from last year. Gasoline demand was somewhat disappointing, but distillate demand spiked. As shown in the graph below, seasonal demand has likely peaked and will be headed lower in the weeks and months ahead. Continue reading "Peak Oil Demand Season is Coming To A Close" →

Cann Group Up 81% In 3 Weeks

Posted on by The INO.com Team

Analysis originally distributed on August 16, 2017 By: Michael Vodicka of Cannabis Stock Trades

This week, I want to share AusCann Group Holdings Ltd. (NASDAQ:ACNNF)/ Cann Group (ASX:CAN) with the free newsletter crowd.

This is a stock I rolled out to members two weeks ago as one of our most recent trades. Members will always get the first look at the best ideas and information we have to offer at CST.

Since being added to the CST portfolio, Cann Group has been surging - Cannabis Stock Trades members are up around 75% on this trade.

2nd Australian Cannabis Permit Holder up 99% in 15 Days - More to Come?

Medical cannabis became legal in Australia in November of 2016.

Under the new program, companies interested in entering the industry must apply for and receive a permit from federal regulators to grow and sell cannabis. Continue reading "Cann Group Up 81% In 3 Weeks" →

Stocks Lower On Threat Of Government Shutdown

Posted on by The INO.com Team

Hello Traders everywhere. Once again the threat of a U.S. Government shutdown is pushing stocks lower. At a rally in Phoenix, AZ last night President Donald Trump said, "If we have to close down our government, we're building that wall."

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Wall Street also has its sights set on Jackson Hole, Wyoming this week, where a coalition of central bankers are meeting for the Federal Reserve's annual Economic Policy Symposium.

Both Fed Chair Janet Yellen and European Central Bank President Mario Draghi are set to speak on Friday. Yellen will likely discuss weak inflation and the Fed's plan to rein in its balance sheet. Strategists doubt that the Fed will initiate any significant policy changes or increase rates with the personal consumption expenditures (PCE) price index making slow gains over the past few months.

Key levels to watch next week: Continue reading "Stocks Lower On Threat Of Government Shutdown" →