CVS Health is the IBD Stock of the Day. The pharmacy operator is offering investors two buying opportunities. CVS stock rose Tuesday.
Drugstore chains have benefited from the Covid-19 pandemic as health and wellness became a top priority. CVS administered more than 32 million Covid tests and 59 million vaccines last year.
CVS has steadily expanded its grasp across the health care space. It bought insurance provider Aetna in 2018. In 2007, it bought Caremark, then the country's third-largest pharmacy benefits managers and the largest U.S. mail-order prescription business. CVS plans to open more HealthHUB locations to offer access to doctors, dietitians and social workers, both in-person and online.
Competitor Walgreens Boots Alliance is also expanding and plans to open more VillageMD primary care operations at stores. However, in January the company reportedly begin searching for parties interested in its Boots international drugstore chain. Estimates have valued the business as high as $9.6 billion.
Covid-19 vaccines and tests are likely to remain key health care offerings in the coming year as the virus moves from the pandemic to the endemic phase. Pfizer is reportedly looking for emergency authorization for a second booster shot for people age 65 and older, according to multiple news reports. The shot could eventually become a yearly necessity, like the flu shot.
CVS Stock Action
Shares climbed 2.5% to 106.98 on the stock market today. CVS stock is coming out of several weeks of very tight trading in which it has hugged its 10-week moving average. The stock jumped up from that support, topping a March 7 high of 106.81. More experienced investors can use that as an alternative entry point.
The gain moved CVS stock up the right side of a flat base with a 111.35 entry point.
The relative strength line, which tracks performance vs. the S&P 500 index, is at new highs. That can be a bullish sign, corroborating a breakout.
CVS Stock Fundamentals
CVS reported fourth-quarter earnings and sales last month that topped Wall Street estimates. But the pharmacy's 2022 guidance suggested a slight earnings decline vs. 2021.
CVS has a 90 Composite Rating out of 99. Its EPS Rating is 85. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity, and relative price performance. Investors should generally focus on stocks with a Composite Rating of 90 or higher.
CVS is the top-ranked stock in IBD's Retail-Drugstores group. Walgreens is No. 2. The group ranked No. 82 on Tuesday, out of the 197 industry groups tracked by IBD.
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