Tom Forester
Tom Forester
Forester Value

Pick: CVS Caremark (CVS)

Of late CVS Caremark stock has been hot, with a 17% gain over the past year. But it's not too late to buy, argues Tom Forester, who's best known as the only U.S. stock fund manager to make money in 2008. His $247 million Forester Value Fund (FVALX) has posted 4.8% annualized returns since launching in 1999 (vs. 2.0% for the S&P). CVS trades at a 13.4 P/E, based on estimated 2012 earnings, below the average for the broader consumer staples sector, Forester says. He thinks the company is well positioned to prevail against Walgreen (WAG) in the battle for pharmacy supremacy. Walgreen had a falling out with pharmacy benefits manager Express Scripts (ESRX), a squabble he says is driving market share to CVS. And Forester says CVS's merger with PBM Caremark is starting to pay off: "Caremark has recently won huge contracts, giving CVS a lock on a steady stream of prescription clients." The broader trends are favorable too: Baby boomers are retiring, which means more prescriptions, and CVS has spent the last few years cutting costs.


By Katie Benner, Ryan Derousseau, Amy Feldman, and Mina Kimes @FortuneMagazine - Last updated June 20 2012: 10:46 AM ET
Join the Conversation
Most Popular

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.