Let’s talk about Cerner Corp. (CERN).

Anyone that's been in a hospital knows the paper work issue is an unmitigated nightmare. Even the biggest and richest hospitals have staff walking around with clipboards and papers asking the same questions over and over -- and they’re checking off boxes with pens that don’t work… and they don’t know what’s going on. It’s really a disaster, and really embarrassing.

And that is why this electronic health-records company is very well-positioned for growth, in fact it was already well positioned before its $1 billion purchase this week of Siemen's health information technology business, that’s just going to make them even stronger.

Years ago this stock was one of those real gung-ho all-over-the-place stocks. It’s not a runner anymore, but I think it’s perfect for a 401k -- if you’re looking for a great place to be. Over the next five years, the Street thinks they are going to outgrow their rivals two to one, gobbling up a lot of market share. My 12 month target is $70.

And now let’s talk about Rite Aid (RAD).

I've been on top of this bad boy since it dropped to $2 a share, and the recent pullback is a buying opportunity. After years of losses, the company posted gains in fiscal year ’13 at $118 million; and then last fiscal year it was $249 million. I think that streak is going to continue.

Now, the first quarter was a little bit of a setback. But some of the numbers were impressive: revenue up almost 3%, same store sales up over 3% and pharmacy sales up 4.6%, even after an avalanche of new generic drugs. So that’s really good news, because they get almost 70% of their business from pharmacy sales. The front-end stuff is cute.

Cash flow is strong, which is the key component in the turnaround story that is in full effect. The company has 4,600 stores and is perfectly positioned.

Here are some of your generic industry drivers: In 2000 there were 35 million 65-year-olds and older. By 2020, there will be 56 million.

The Affordable Care Act is going to help, and probably create another 25 million customers in the next couple of years. So the next leg up on this, I think, $6.90 could happen fairly quickly. Longer term, I’m looking for $8 -- even much, much more on this one.

DISCLOSURES

Cerner Corp. (CERN)

Owns

Family Owns

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Banking

CHARLES N N N N
DAVID N N N N
TRACY N N N N
MATT N N N N
HITHA N N N N
KATE N N N N

Rite Aid (RAD)

Owns

Family Owns

Firm Owns

Investment
Banking

CHARLES N N Y N
DAVID N N N N
TRACY N N N N
MATT N N N N
HITHA N N N N
KATE N N N N

 

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