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Walgreens Looks Healthy With or Without Duane Reade


That said, adding the chain with a NYC focus will benefit the company as the city's economy bounces back.

I went ice skating yesterday with the kids. And let me tell you, they never had to send out the Zamboni to clean the ice because my hind quarters polished it very nicely.

The Hang Seng and the Nikkei rose overnight, 2.43% and 2.74% respectively. European stocks however, were more of a mixed bag. And here in the US, we're currently trading higher.

Here's what I'm seeing this fine Monday morning:

Walgreen Co.
I'll give you three guesses which drugstore chains received a nice write-up in Barron's, and the first two don't count.

Some thoughts:

1. Even if Walgreens wanted nothing to do with Duane Reade, I'd still like it because of its huge footprint, clean stores, good prices, and what I think are some really big opportunities to grow over the next decade.

2. That said, adding the chain with a huge NYC focus could really benefit the combined company big time as the city's economy bounces back. There could be lots of potential for cost savings with the pickup.

3. The shares have pulled back from just over $36 in the latter part of January and I'd view this as an opportunity to belly up. My sense is that the Barron's article could give it a little goose.

Incidentally, Walgreens isn't the only chain I'm liking in the space these days. CVS (CVS) is worth a look, too.

(See also, What's Next in Drugstore Deals.)

I'm still keen on Best Buy (BBY). But "The Shack" is hard to ignore given its stock's resurgence.

Keep an eye out for the company's fourth-quarter results later on today. The Street is at $0.59 and I'm going to go out on a limb here and say it beats. Obviously I don't know for sure, but I'm hoping management paints a pretty picture for 2010 and beyond on the call after the close. I think the demand for consumer electronics could really get a bit of a goose in the coming months as consumers become more and more liberal with their everyday spending.

Limited Brands (LTD):
Justin Sharon points out this morning in his article that UBS started the company with a Buy.

The Ohio-based company has been on a tear and it's hard to ignore. It's been pummeling estimates the least four quarters, and its stock has taken off and is actively flirting with a new 52-week high.

I feel comfortable about its earnings prospects going forward, so my take is that the momentum in the stock could keep right on going. A new high could certainly put it on a few radar screens. That said, I'm a bit reluctant to jump in full force because at 17.8 times this year's estimate, it's not exactly a major bargain anymore.

Monster Worldwide
Stifel upped its rating on the job giant to Buy.

I certainly think the rating bump could give the shares a goose in today's session. But overall, I think the stock is -- sorry to say bulls -- way ahead of itself. Keep in mind that this year it's expected to post a small loss, and next year it's expected to earn just $0.31, which is certainly nothing to write home about. To boot, I'm not too excited about the job environment in the near future. Needless to say, I'll take a pass.

Have a great day!
No positions in stocks mentioned.

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