CVS Health

Ticker: CVS, Buy below $65.

CVS Health is US healthcare company that owns a pharmacy chain, pharmacy benefits manager and a health insurer.

Why I Would Buy

  1. Defensive Play – Pharmacies and health insurance is generally resistant to economic cycles.   
  2. Cheap – Forward P/E less than 8x.
  3. Dividend – generous 3.5%+ yield, <40% payout ratio.

What Could Go Wrong

  1. Retail – Retail is a big part of CVS’s revenues, this has traditionally been a poor and hypercompetitive business segment.
  2. Debt – Enormous debt load, negative tangible book value.

Disclosure: I am long CVS, please read additional disclosures here before taking any action based on this post.