Rite Aid (NYSE:RAD) Remains a Stinker Despite a Potential Deal with Walgreens
How do you know an investment is terrible? If a miraculous event needed to occur for your company of choice to remain a going concern actually does occur, and yet it still trips up, you have a terrible investment!
That's how I feel about Rite Aid (NYSE:RAD). My InvestorPlace colleague, Brett Kenwell, was featured today on Yahoo's front page, detailing the ongoing drama between RAD and its potential suitor, Walgreens Boots Alliance (NASDAQ:WBA). He wrote: "As doubts lingered about whether the Federal Trade Commission would approve the deal, RAD stock continued to sink to new lows. After what felt like a lifetime, reports finally began coming out at rapid fire."
Continuing, Kenwell laid out the details:
Some said the FTC was going to file a lawsuit to block the merger. A few days later, another said it was likely to approve the deal. WBA management took matters into its own hands and began reworking the deal with RAD, agreeing to pay a $325 million termination fee.
Instead, Walgreens will now pay $5.175 billion in cash for 2,186 retail location, three distribution centers and inventory. Fred’s, Inc. (NASDAQ:FRED) has been cut out of the deal altogether, which allows WBA to expand its footprint. Management says it will realize more than $400 million in synergies.
Still, Rite Aid shares have a history of ignoring positive news. In June, I wrote the following for InvestorPlace:
I also don’t trust the markets’ implied assessment. Well prior to me jumping into this mess — and I’ll freely admit I’m a “Johnny-come-lately” — the bulls were trumpeting RAD stock. They were flat-out wrong. When some doubled down on their optimism, they became disastrously wrong.
Needless to say, I’m in no mood to entertain market interpretations on Rite Aid. Instead, I’ll just go with common sense, and assume the worst-case scenario.
Thanks for your advices. You do a great job.
This is a good read, thanks for the advise , however tell Cheetah to take a nap and leave you alone. Upped
Thank you so much! I don't know what's going on but these days, it seems Cheetah only cares about pinging proper use of citing/sourcing, while ignoring blatant acts of plagiarism! Priorities, I guess :)
I guess so, Cheetah should drink some milk and take a nap.
Feel free to see my katest post
You are gonna miss some easy money with RAD its worth more than the $2.48 a share
People have been saying that when RAD stock fell to $7, then $6, then $5, then $4...and on and on. Eventually, they may be right, but historical performance is not very encouraging. Rite Aid needs to revamp their business and strategy, which is possible, but this could go either way.
Well said.
Im not worried about the business im just paying attention that the fall to the lower its trading at now is based on the Walgreens merger not happening the business was the same before that fall. Watch ive already made profit got in at $2.25 but ill let you know when and where i get out at there is always an opporitunity in the market no matter the condition.