Question

growth investing provides the best method for growing an investment in the stock market. both value stocks and income stocks can bring returns, but neither offers the substantial increase of a growth stock, due to the growth companys solid fundamentals over a long period of time.
one outstanding growth company is walgreens, a 105 - year - old drug store chain with a market cap of $43.78 billion. the industry average, in comparison, is $22.72 billion, the same as the market cap of walgreens closest competitor cvs. with 5,080 drug stores, walgreens controls 14% of the prescription - drug market, while rival cvs holds a slightly smaller market share. besides wal - mart, walgreens is the only fortune 500 company to increase in sales and earnings each year for the last 30 years. this might explain, in part, why walgreens stock trades at over $40 a share, compared to less than $30 for cvs.
what sets walgreens apart? first, the company has made selecting prime real estate a priority - since, in the drug - store industry, location is key. second, walgreens has opened the greatest number of 24 - hour stores, allowing customers to access walgreens services anytime. third, the company has tailored its services to specific locations, meaning stores in upscale neighborhoods are carrying pricier products.
do these management decisions hold the keys to walgreens success? perhaps. whatever the influence, walgreens fundamentals remain solid. with a long - term (five - year) growth rate of 15.60%, the company regularly performs better than the s&p 500.

1. what makes growth investing a good investment strategy?
2. how does walgreens compare to its closest rival cvs?
3. how do you think walgreens management decisions have affected its fundamentals?
4. cvs is shutting down many of its retail stores. knowing some of the things you are learning in this class, why do you think they may be doing this?

Explanation:

1. Growth investing is a good strategy as growth stocks, due to a company's solid fundamentals over time, offer substantial increases compared to value and income stocks.
2. Walgreens has a higher market cap ($43.78 billion vs. $22.72 billion for CVS), controls a larger prescription - drug market share (14% vs. slightly smaller for CVS), and its stock trades at a higher price ($40 + vs. less than $30 for CVS).
3. Walgreens' management decisions (selecting prime real estate, opening 24 - hour stores, tailoring services) likely enhanced its competitiveness, customer access, and revenue streams, thus strengthening its fundamentals (e.g., long - term growth rate of 15.60% and better performance than S&P 500).
4. CVS may be shutting down stores due to factors like lower market share (compared to Walgreens), potential over - expansion, inability to compete effectively in terms of location (Walgreens' prime real estate focus), or changes in consumer demand (Walgreens' 24 - hour and tailored service advantages).

Answer:

1. Growth stocks offer substantial increases due to a company's solid fundamentals over time.
2. Walgreens has a higher market cap, larger prescription - drug market share, and higher stock price.
3. Management decisions likely enhanced competitiveness, customer access, and revenue, strengthening fundamentals.
4. Possible reasons: lower market share, over - expansion, location competition, or consumer demand changes.