Analysis: CVS PANW

After you receive this Alert, we will be buying 100 shares of CVS Health (CVS) at roughly $54.68. Following the trade, CVS will represent 4.25% of the portfolio.

We will be adding to our CVS Health position on today's declines that are not based on any new fundamental news. This action in the stock is an extension of what has been going on since the company provided downside 2019 guidance in late February; however, we are willing to be patient here with the stock's healthy 3.66% dividend yield and a 2019 price-to-earnings multiple of just 8x.

As we saw with Palo Alto Networks (PANW) last fall (and watch our February members-only conference call here that explains it), you have to buy and exercise wide scales when there is an incessant amount of selling on the same news or no real news, no matter how painful it may be in the short-term. And we believe it will be short-term because the company's only main issues rest with its headwinds related to the Long-Term Care business and industry-related pressures, which are expected to abate as we move through this transition year and into a return to growth in 2020.

The position is painful right now, but it's extremely cheap, retail pharmacy script growth is still outperforming, and the company will have Aetna as a new driver of growth once management proves it can be successfully integrated. It's hard to see right now because management must do better in explaining it, but there will be tailwinds on the horizon thanks to the data and analytics the company will be able to leverage.