ON DRUG

PJC

Opened a small position on PJC today. Again I procrastinated in the morning when I could get it at 16. Believe it or not, I actually had a plan coming into this morning’s earning report that I would take a position in weakness, but for reasons beyond my comprehension, I did not put the plan into action and I have to pay 0.70 more for my sin. The results came worse than expected (although most analysts on the street were expecting a worse report). The SSS numbers appeared to be positive though and growth of its Canadian operations slightly exceeded expectation. It also helped that the market decedes to run up instead of falling down. Despite the weakness, there are a lot of sponsors in the street as they believe that management will be able to turn the Ecker stores around. Also, starting from next quarter, the comparison will be much better for PJC. I also like the sector, unfortunately I am having a hard time with SC’s valuation. If the management is able to deliver the synergies in the next couple of years, PJC should be traded around mid 20s, which would give me a decent 30% return. In the meantime, there is a small dividend for waiting around.