CVS Health Corp (NYSE:CVS) Continues to Grow by Acquisition

March 30, 2016

Jeffrey Cornell, Portfolio Manager at Johnson Investment Counsel, says CVS Health Corp (NYSE:CVS) continues to grow sales by making acquisitions.

They bought the Target (NYSE:TGT) pharmacy business. They’ve made some other big acquisitions here, which has been very helpful. Their old Caremark business that they bought years ago, which is basically mail-order pharmacy, continues to win over a lot of contracts, and we expect continued consolidation within that industry.

So it’s very positive for them, and the other leader in that field also, which is Walgreens (NASDAQ:WBA). CVS has a yield that is little bit under the market. It’s about 1.7%. They’ve got plenty of free cash flow. They’ve got about $4 billion in free cash flow that they can do what they would like to do to increase that yield, do additional buybacks or whatever.

Jeffrey P. Cornell