Jay Jackley, Senior Portfolio Manager of Compass Capital Management, says health care is an area where he has found value in the market, and CVS Health Corp (CVS) is a stock that has delivered.
[CVS is] the leading health care services provider in the United States with its large pharmaceutical services company and the United States’ largest retail pharmacy chain. The company fills over 1 billion prescriptions per year and has 7,800 stores in 40 states. In addition, the company provides medical services through its MinuteClinic walk-in clinic business.
The company is projected to grow earnings at 12% to 14% annually over the next five years. The company has steadily increased its operating and net profit margins over the past 10 years. The recent acquisition of Omnicare, a pharmacy services company with a focus in nursing homes, will help further the company’s growth.
The company has a strong balance sheet, and the business generates about $6 billion in cash flow annually. This has helped fuel a 30% growth rate in the dividend payout over the past five years.
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