BARGAIN GROWTH: Walgreen
Market Cap: $30.9 billion
PEG ratio: 1.15
Earnings Growth: 13%
Debt/equity ratio: 0.17
Despite a tough retail environment, the drugstore chain's returns fell only 14% last year, making it the best performer in our bargain growth portfolio. As the recession deepened, Walgreen's stable pharmacy businesses kept it afloat. Now, things are turning up throughout the store: Both retail and drug sales rose in May, yielding a modest 1% increase in same-store sales.
Edward Kelly, a Credit Suisse analyst, rates Walgreen an "outperform." In a recent note, he wrote "While the near-term outlook is mixed, we see 2010 as an inflection point as Walgreens' strategy to cut growth, reduce expenses, and improve merchandising/in store execution should yield strong earnings upside."
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Unilever
Last updated June 11 2009: 10:27 AM ET
Criteria include PEG ratios (price/earnings ratio divided by earnings growth) below S&P 500's PEG rati of 2.09, long-term earnings growth equal to 7% or more, and a debt-to-equity ratio below 0.33. All data related to stock price as of June 1, 2009. Earnings growth based on Wall Street estimates for the next three to five years.
