Could CVS Health Help You Become a Millionaire?

CVS Well being (CVS 0.13%) might look like a protected and even perhaps boring inventory to personal. Whereas most shoppers might comprehend it as a pharmacy retailer, its enterprise has develop into a lot broader over time. And with the latest strikes it has been making, this has the potential to develop into a behemoth within the healthcare business. Might investing within the firm enable you develop into a millionaire?

There’s loads of progress potential on the market for the enterprise

Along with pharmacy retail, CVS is in pharmacy advantages administration, and medical health insurance, and with its two most not too long ago introduced acquisitions involving Signify Well being and Oak Avenue Well being, it could quickly be capable to add house well being and first care to that listing as nicely.

CVS has been evolving its operations in order that its shops are extra than simply common pharmacies. The corporate has been reworking them into “HealthHUBs” the place folks can get hold of well being companies, together with remedy for frequent sicknesses and power situations like diabetes. By increasing into major care, the corporate might be able to increase the choices at its shops even additional, maybe following within the footsteps of rival Walgreens Boots Alliance, which is launching clinics at its shops.

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NYSE: CVS

CVS Well being

At this time’s Change

(0.13%) $0.10

Present Value

$77.10

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PRICEVS S&P

 CVS

KEY DATA POINTS

Market Cap

$99B

Day’s Vary

$76.87 – $78.16

52wk Vary

$76.66 – $109.69

Quantity

7,852,493

Avg Vol

9,815,674

Gross Margin

16.62%

Dividend Yield

3.14%

Whereas there may very well be loads of competitors within the healthcare industry sooner or later if giant corporations corresponding to Amazon and Walmart determine to increase additional into it, the benefit CVS has is its title and trusted model.

The enterprise has develop into way more distinguished in healthcare by means of acquisitions (most notably, Aetna in 2018), and that has led to hovering income progress for CVS in recent times. And with the corporate nonetheless pursuing acquisitions, this pattern is not more likely to finish simply but.

CVS REVENUE (ANNUAL) DATA BY YCHARTS.

CVS is an undervalued inventory in the present day

The good thing about shopping for CVS inventory proper now’s that it is buying and selling round its 52-week low. Acquisitions can usually ship a inventory worth down, even when it’s a long-term play that would repay. The $10.6 billion it’s spending on Oak Avenue Well being actually is not an inexpensive worth because the enterprise is unprofitable. But it surely may result in synergies and progress in the long term, which may make it a worthwhile funding for CVS.

Buying and selling at lower than 10 instances its future earnings (based mostly on analyst expectations) and just one.5 instances ebook worth, an argument might be made that CVS is undervalued. By comparability, the common healthcare inventory trades at 17 instances its projected future income and greater than 4 instances its ebook worth.

Given its dimension and main place within the healthcare business, CVS is a a lot safer purchase and will commerce at higher multiples than it does in the present day.

Can CVS assist make you a millionaire?

Over the previous 10 years, an funding in CVS would have doubled in worth when together with its dividend. That lags behind the S&P 500, which throughout that stretch has achieved complete returns (together with dividends) of 218%.

Whereas these returns aren’t encouraging for CVS buyers, sooner or later, the inventory may carry out a lot better. Not solely are its operations extra various, however the U.S. inhabitants is getting older, and the necessity for healthcare goes to be way more important than it has been prior to now. And CVS will likely be in a main place to capitalize on that.

For these causes, the inventory actually has the potential to be a millionaire-making funding. If it may possibly common complete returns of 13% over the following 25 years, an funding in CVS could be value 21 instances what it’s in the present day. Primarily based on that, you would want to speculate round $48,000 to get to $1 million — assuming that price of progress and a 25-year holding interval. Under no circumstances is it a assure, however investing in CVS can assist make you a millionaire.

Nonetheless, if that is too huge of a lump sum so that you can put money into a single inventory, it’s possible you’ll wish to think about investing in healthcare-focused exchange-traded funds, which might provide better diversification.