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Tickers in this Article: WAG, CVS, RAD, WMT, TGT
Pharmaceutical and drugstore stocks may have a very bright future as the American population ages and increases in physical size. However, in the near-term there is opportunity in these spaces as well. Take, for instance, the drugstore space and Walgreens (NYSE:WAG), on the heels of its most recent earnings announcement.

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The Right Rx
Drugstore companies these days may not offer the same personalized service as they once did, but today's consumer can fill prescriptions quickly, and often at all hours of the day. In addition, the drugstores carry a wide range of merchandise in the front of their many stores like newspapers and magazines, tobacco products, personal care products and makeup to name just a few.

Walgreen made headlines earlier in the week after the Illinois-based chain released its second-quarter earnings. Excluding restructuring costs, it earned 70 cents per share. Analysts were expecting 71 cents. But Walgreen doesn't deserves to be punished for this at all.

The company has great longer-term growth potential because of our aging demographic. It also beat expectations in the two quarters before that. Not to mention that it has a huge base of more than 7,500 locations, which should leave it in a good position to reap the benefits as this economy progresses forward. Solid demographic trends and a generally solid earnings history make this an attractive play.

Other Plays On The Space
CVS (NYSE:CVS) trades near its 52-week high and it deserves to. It has beaten expectations four quarters straight. The company is expected to grow its EPS by more than 10% from this year to next year (from $2.80 in 2010 to $3.10 in 2011), and it has excellent growth potential beyond that. Based upon the EPS outlook, the shares could be worth the low to mid $40s at a minimum. And the small dividend is like a topping on this ice cream. (For a look at high dividend paying stocks, check out Big Dividends In Oil and Gas.)

Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) are not typically thought of as drugstores, but they fill prescriptions and sell an extensive array of vitamins and other items that are found in drug stores. Their ability to lure individuals in with other merchandise makes them a competitive threat to be reckoned with going forward. Target is particularly attractive in this environment due to its ability to sell goods at low prices, and because of its earnings potential in time.

Wall Street analysts expect the company to earn $3.65 per share this year and $4.25 a share next year, which would turn some heads if it is achieved. Wal-Mart is expected to generate $3.98 per share this year and $4.26 per share, which, if achieved, would be good growth for a company of its mass and maturity.

Rite Aid (NYSE:RAD) however, is a company that generates less enthusiasm. Its low-priced stock and the expected losses in terms of EPS should concern investors.

The Bottom Line
In the short and long run drug store stocks have solid promise, and Walgreen is looking like a great way to play this space. In spite of its latest quarter, it is expected to generate solid earnings this year, meaning the stock can move higher from here.

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