Group Jean Coutu – An Opportunity For the Patient Investor
Note: Dollar amounts are in Canadian $ unless mentioned otherwise. USD-CAD 1.0295 Price of 1 USD in CAD
Jean Coutu Group PJC Inc. (PJC.A, OTC:JCOUF) is Canada’s 2nd largest publicly traded drug store retailer with a market cap of about ~$4.1 billion and 411 locations. Their stores are located in metropolitan areas, mid-sized cities and small towns across Eastern Canada. PJC is also the second-best performing pharmacy stock in North-America in the last three years, up 122%, behind Rite Aid’s 232% gain. However, these nice stats don’t make PJC a hot bandwagon stock. It’s actually quite the opposite. The following opportunity is appropriate for the investor with a time horizon of over five years, a rarity in today’s hyperactive environment. If you are the type of investor that looks up the stock price every five minutes don’t invest in PJC. Unfortunately, PJC’s stock price doesn’t bounce around on random Tweets.
My approach to this valuation is similar to the one I would take if I would be buying a private enterprise. PJC has the characteristics of what I’m looking for: a good old cash rich drug store retailer with solid stable free cash flow, no debt, modest growth, heavy insider ownership, long-term potential, and that provides goods and service essential to the community. In today’s investing environment, PJC would classify under the boring investment tab. It’s the good old buy and hold. For the rest of the article click here.