Drugstore.com (DSCM)

[MrBankRoll]

Posted: 2008-10-27 06:00:00
Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Enterprise Products Partners, L.P. (NYSE: EPD), Johnson Controls, Inc. (NYSE: JCI), drugstore.com, inc. (Nasdaq: DSCM), Rite Aid Corp. (NYSE: RAD) and The Potash Corporation of Saskatchewan Inc. (NYSE: POT).

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Here are highlights from Friday’s Analyst Blog:

Enterprise Products a Core MLP

Enterprise Products Partners, L.P. (NYSE: EPD) reported strong third-quarter results, raised quarterly distribution, and declared that it had sufficient internal resources to meet its next year’s growth capital needs. Total gross operating margin increased 32% year-over-year, primarily driven by the diversified NGL and natural gas pipeline and storage businesses.

Importantly, the master limited partnership [MLP] announced a 6.6% year-over-year increase in quarterly distribution to the annualized run rate of $2.09 per unit. Quarterly distributable cash flows provided very comfortable 1.2x coverage to cash distributions to limited partners. Our continued favorable view of EPD units reflects the partnership’s diversified asset base, strong distribution growth prospects, and attractive valuation.

Johnson Controls Holding Steady

We maintain our Hold rating on the shares of Johnson Controls (NYSE: JCI), a supplier of automotive interiors, batteries, and other control equipment.

The company’s cost reduction efforts, accretive acquisitions and healthy operating cash flows are driving the stock. The results of JCI’s strict cost discipline are evident in its expanding margins and strong cash flow.

drugstore.com Strong, Long-Term

drugstore.com (Nasdaq: DSCM) recently outlined its strategy to achieve profitable sales growth over the long term. This includes increasing share in the over-the-counter market, growing its international business, entering new partnership arrangements and expanding into higher margin product lines. drugstore.com believes that this strategy will enable the company to double its total sales and increase its gross profit margin to 30% by 2013.

The company also expects to have an EBITDA margin of 8% by 2013 and generate about $130 million in cumulative free cash flow over that time. drugstore.com continues to expand its reach through partnerships like its renewed agreement with Rite Aid Corp. (NYSE: RAD), which is a co-branded OTC store.

Potash Fueled by High Prices

The Potash Corporation of Saskatchewan Inc. (NYSE: POT), a Canadian corporation based in Saskatoon, Saskatchewan, is the world's largest fertilizer enterprise producing three primary plant nutrients potash, phosphate and nitrogen.

On October 23, Potash reported 2008 third-quarter earnings of $3.93 per share. Fueled by significantly higher prices for all potash, nitrogen and phosphate products, gross margin for the third quarter grew to a record $1.7 billion, up from $475.1 million in the third quarter of 2007.