Why I'm Sticking With Walgreen's

Thus far I have been dead wrong about Walgreen's. I thought they would have settled by now with Express Scripts and they have not. However, at this point I believe the stock is pricing in a worst case scenario.

The street low estimate for next fiscal year (August 2013) earnings is $2.88. Before the Express Scripts dispute analysts were expecting $3.50. Even if this worst case scenario comes to pass the stock is now trading at a 12 multiple to a worst case scenario. Walgreen's also pay a 2.7% dividend.

Before the dispute Walgreen's traded as high as the the mid forties.  The stock is now at a reasonable multiple to worst case scenario earnings, with a free call option embedded in the case where the dispute is settled. I still expect the dispute to be settled.

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