Tomahawk, WI 9/17/2013 (BasicsMedia) –  Rite Aid Corporation (NYSE:RAD) has a strong presence in 31 states across the U.S, where it operates its more than 4,620 retail drug stores. This retail drugstore giant specializes mostly on selling prescription drugs, but this has not prevented it from diversifying into other front end products. Prescription drugs annually account for around 67.4% of all of RAD’s total sales, while the front end products are responsible for roughly 32.4%. Its stock has been on a steady run and I expect this to continue probably into 2014. What are the reasons for this run?

 RAD’s Performance Compared to Competitors

 Some of the competitors which RAD has been contending with include Walgreen and CVS Caremark. These two competitors have, much like RAD, been able to post very good results as well in 2013. However, based on what I have seen, RAD has outperformed these two competitors in many aspects. An example of the sort of performance I’m talking about here is seen from the sales the company announced for a 4-week period which ended on July 27th. The company reported that its sales had improved by 0.9% to settle at $1.89 billion in this period.

 However, one has to appreciate the significance of such sales in context. There was a time when RAD’s results were nothing more than quarterly losses reported every time the company announced its financial results. It now appears to have found a way of attracting profits and remaining profitable. The impressive, though some people consider this to be marginal, profits posted by RAD offer a clear indication of the fact that the company is quietly turning its fortunes around, and is not a loss-making entity as it was once known.

RAD Still Attracts Revenue and Net Income

 RAD’s front end same store sales have been on the rise just as much as its pharmacy same store sales. When the company announced its financial results on June 1, 2013 what was clear and not in doubt is that it managed to attract revenues to the tune of $6.3 billion. Its net income came to about $89.7 million, which may not be quite to the standards within this industry, but is nonetheless remarkable for a company which had previously known nothing more than losses. When RAD reported its net income, this was the third consecutive quarter in which it happened.

 RAD’s Total Drug Store Sales Decreased

 The total drug store sales over a 21-week period decreased by around 1.2% compared to the same period last year. This has been attributed to the fact that the company suffered as a result of the introduction of low cost generic drugs. The total drug store sales went down to $10.089 billion from the previous amount of $10.247 billion. Since there is nothing much that can be done to forestall the role played by generic drugs, I project further fall in the next five years. It is worth pointing out that RAD still has to resolve its debt which stands at $5.8 billion.

 The future of companies such as RAD is not in great doubt. This is because the Affordable Care Act will see to it that 10 million new customers are able to enjoy healthcare insurance. As a major player in the retail pharmacy sector, the company is set to benefit from the $350 billion which the industry is expected to be worth by the end of 2015.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.