An Update on CVS

Many of you may remember that a while back I shouted very loudly on multiple platforms about the value which was hidden away in CVS.

That was at $53 a share.

Looking at where we are now, we can see that so far some of this value has been realised. I bought my CVS shares early this year and have held them ever since. By far, in my long-term investment portfolio, they have the greatest weight.

It all started when the Aetna acquisition led to a massive increase in the amount of debt on the balance sheet and various announcements like dividend freezes appeared. The stock price tanked. What an opportunity to buy.

Lately, I've been taking a more analytical approach to the CVS share price by creating a DCF valuation of the company. The more I look at the financial reports, the more I am convinced that the company could see another 40% increase in the share price.

I am not the only one who is bullish, the company's management announced its second earnings increase forecast for the year and once again the share price rallied.

I'm not solely here to gloat, I do firmly believe in this company, and will continue to hold it.


However, there is a slightly more important reason why I am going to be holding this stock over this volatile period. Historically, CVS has performed very well against the S&P500 during times of recession. In the 2008 financial crisis, the S&P lost over 50% of its value, whereas CVS lost only just under 2%. What this tells me (especially with the already subdued valuation) is that this stock could be very good as a defensive play for a downturn.


Once my DCF valuation has been completed, I will be uploading a Google Drive which will be available to readers to analyse my assumptions more closely.



Thanks