Rite Aid Corp (NYSE:RAD)

From their annual report:

"Our earnings were insufficient to cover fixed charges and preferred stock dividends for
fiscal 2011, 2010, 2009, 2008 and 2007 by $564.8 million, $498.4 million, $2.6 billion, $340.6 million and
$50.8 million, respectively.

Our high level of indebtedness will continue to restrict our operations. Among other things, our
indebtedness will:

• limit our flexibility in planning for, or reacting to, changes in the markets in which we compete;
• place us at a competitive disadvantage relative to our competitors with less indebtedness;
• render us more vulnerable to general adverse economic, regulatory and industry conditions; and
• require us to dedicate a substantial portion of our cash flow to service our debt."

By the way -- the word 'debt' occurs 193 times in their 119 page annual report.

Interest coverage = 0.2x
Quick ratio = 0.4x

Operating income hardly exceeds interest payments. How do you compete against WAG and CVS when you are barely scraping by after servicing debt?

Additionally, options and warrants available equal 14% of current shares outstanding... even if it does rebound shareholders will continue to experience further dilution.

takeover play but big debt & competition.

It is never a good thing when a retailer is closing stores to stay afloat.

Will capitalize on ESI/WG dispute. New RX customers also means new incremental sales and added Wellness Plus loyalty customers. RAD continues to add value to shoppers experience and significant "Wellness" discounts, perfect timing for peak retail season.

RiteAid will pick up millions in sales from Walgreens.
This stock will do well now that Walgreens lost express scripts. I am long on RAD

Rite Aid is a vary Undervalued. It gets hit heavily because of the fact it has so much outstanding debt. However it has closed over 20 something stores across the USA this past year. I like the fact that it is in the Retail Drugstore Sector, and think it will outperform the coming years ahead.

May not go out of business but will never recover to it old levels.

Rite Aid is a speculative play. However in a low interest rate environment they may be able to refinance their huge debt and concentrate on profitable stores in good areas. Rite Aid could end up acquired at a much higher price than the current stock price.

Can't compete with CVS. Predict eventual buyout by Walgreens or CVS.

History, stabalized debt., high Pharmacy sales %.

Covestor Model Manager AthenaInvest bought RAD in his Athena US Equity Covestor Model ( http://covestor.com/AthenaInvest )

some day it will be paying out dividends at this much........

IT'S GONNA TAKE A LOT OF TIME BEFORE THEY CLEAN UP THEIR BOOK... BUT I BELIEVE THEY CAN DO IT

RAD has an extremely low valuation, but pulls people into stores and should recover profits in the next year or so

if it succeds in forming allience with grocery shops, it may break ground for profit

As per the WSJ Miguel Bustillo article:

"Wal-Mart Stores Inc. is planning to open dozens of small stores in the nation's cities, in an effort to push back against the dollar chains and other competitors nibbling at its customers"

This makes RAD a most likely target, they will get retail, the pharmacy and most important the pharmacist all wrap in a penny stock. Target Price $5.00 to keep CVS and WG out.

The capital markets have given up on this company in issuing any more debt. The only thing left for them to do is issue a billion more shares or dive deeper into the well which will eventually screw stockholders. Some sort of BK must be inevitable as I sit and watch their negative equity get redder and redder.

Some other pharmacies are looking at this bargain price. Expect a take over soon.

strong buy