After a nice run since March, shares of CVS have performed very poorly recently. I sold my position in May but have been writing naked Puts in the past few weeks in order to re-establish a position. I believe the shares are becoming quite attractive again.
They trade at less than 12 times 2012 earnings. While better multiples can be found, they trade very cheap given that they are in such a steady business. They have demographic tailwinds as baby boomers age and use more medicines. Additionally, they make more money on generic drugs and hence will profit in the next few years as a wave of blockbuster drugs go generic. The company is aggressively repurchasing shares. I believe the recent weakness in the shares is an opportunity.