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Rite-Aid: Playing With The House's Money

It has been some time since I have opined on Rite-Aid (NYSE:RAD). I first got behind the name on Seeking Alpha two years ago in April 2013. In that article I described how I owned common stock under $2.00 and had sold covered calls on 30% of the position. With the stock rocketing to $2.20 a share, I was in danger of being called away. I wasn't. I took some profits on the name around $5.00 in 2014 and held the rest. In September 2014 I became a bit more cautious on the name and lowered the stock to a hold rating. However, the stock has continued to roar higher on the back of generic drug sales and efficient management of facilities. 

I have a hefty profit at this point and know better than to be greedy. That said, I sold my entire initial investment, and then some this morning after earnings. The rest I am letting run, and I think I may be rewarded. For those on the sidelines, Rite-Aid is looking like it will continue to take market share. Sales are rising, earnings have completely turned around from a few years ago and the company is likely to see continued prescription volume increases. The company's just reported results support this thesis. I will discuss the results and my expectations going forward. Read more