Rite-Aid (NYSE: RAD), a competitor of CVS (NYSE: CVS) and Walgreen (NYSE: WAG), tanked Thursday. By the end of the trading session, the pharmacy's stock declined almost 23% on heavy volume. Yes, it was a horrible day in the market overall, but don't blame the market at large. Rite-Aid is simply a company to avoid, and its latest earnings data show why.

According to the AP, Rite-Aid booked a loss of $0.20 per share for its fiscal first quarter versus a profit of $0.04 per share in the year-ago period. There are some growing pains going on here, since Rite-Aid is attempting to integrate its purchase of Brooks Eckerd. That acquisition propelled the company to top-line revenue growth of 48%. Unfortunately, analysts were looking for the company to lose only $0.09 per share. The significant differential made investors feel justified in punishing the stock. Heck, I'll bless the sell-off myself.

It'll be a long time before Rite-Aid finally turns its ship around. The next fiscal year will bring more losses, and with strong competition out there from CVS and Walgreen, the road ahead for management won't be for the faint of heart. This is truly a speculator's stock. I took a look at a post I wrote on Rite-Aid back near the beginning of April. At that time, the stock was priced at about $2.89 per share. As of Thursday's close, the shares were trading for $1.35. The Rite-Aid story belongs in the horror genre, and its stock is best left to those professionals who don't mind losing money. Individual investors? This company isn't for you, in my opinion.

Disclosure: I don't own any company mentioned; positions can change at any time.

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Walgreen (NYSE: WAG) reported sluggish Q3 numbers last week. Net sales increased a little under 10% to $15 billion. Net income increased a whopping two pennies to 58 cents per diluted share (the term "whopping" is used here sarcastically). According to this article, Walgreen met top-line expectations but missed the bottom-line call by a penny.

Gross margin remained relatively stable, but the net margin dropped to 3.8% in the quarter compared to 4.1% in the previous year's similar period. But same-store sales increased 3.4%, which is a decent number. Also, operational cash flow jumped over 19% to $2.5 billion. That's excellent; it's always good to see cash coming in. It helps mitigate the tepid earnings expansion. Walgreen did well with its cash-flow statement last time around as well. Walgreen management cited the economy as a factor in its earnings stats and highlighted the fact that it cut back on expenses, including advertising. Making sure costs don't get out of hand is important, but I'd be careful about eliminating too much of the advertising budget. Competing with CVS Caremark (NYSE: CVS), Rite-Aid (NYSE: RAD), and the pharmacy at Wal-Mart (NYSE: WMT) obligates brand-building and differentiation.

Walgreen's Q3 wasn't beyond awesome, but it was solid enough. The stock is only down slightly as I write this. As a long-term play on the need for drugstores, it's not a bad way to go.

Disclosure: I don't own any company mentioned; positions can change at any time.

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Moody's downgraded the debt of Washinton Mutual (NYSE:WM) to A2, according to Briefing.com. The news service also reports that Citigroup downgraded Intuit (NASDAQ:INTU) to "hold" from "buy".

Deutsche Bank has upgraded Micron (NYSE:MU) to "buy" from "hold", according to MarketWatch.

Thomas Weisel Partners reiterated its "outperform" rating on CVS Caremark (NYSE:CVS) ahead of the company's analyst meeting, according to the AP.

Douglas A. McIntyre is an editor at 247wallst.com.

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Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Cisco Systems Inc. (NASDAQ: CSCO) beat Q2 expectations but offered a weak outlook.
• Clear Channel Communications Inc. (NYSE: CCU) higher Q1 profits failed to beat expectations.
• Crocs Inc. (NASDAQ: CROX) just missed EPS estimates but raised its full-year guidance.
• CVS Caremark Corp. (NYSE: CVS) strong Q1 results only met Wall Street expectations.
• eResearch Technology Inc. (NASDAQ: ERES) beat Q1 expectations and offered Q2 and full-year guidance.
• Foster Wheeler Ltd. (NASDAQ: FWLT) beat estimates due to a boost in its power plant segment.
• Internet Brands Inc. (NASDAQ: INET) reported strong Q1 results on ongoing M&A.
• Midway Games Inc. (NYSE: MWY) widened its loss in Q1 but beat expectations.
• News Corp. (NYSE: NWS) Q3 earnings jumped on a one-time transaction with Liberty Media.
• NVIDIA Corp. (NASDAQ: NVDA) missed Q1 estimates but was upgraded by analysts anyway.
• NYSE Euronext (NYSE: NYX) reported a first-quarter profit above analysts' estimates.
• Sara Lee Corp. (NYSE: SLE) Q3 profits surged but fell short of analysts' expectations.
• World Wrestling Entertainment Inc. (NYSE: WWE) posted strong results but couldn't cover its dividend.

Upcoming results to watch for include Sprint Nextel (NYSE: S), XM Satellite Radio (NASDAQ: XMSR), Sirius Satellite Radio (NASDAQ: SIRI), Electronic Arts (NASDAQ: ERTS), Whole Foods (NASDAQ: WFMI), Wal-Mart (NYSE: WMT), Deere & Co. (NYSE: DE), Toll Brothers (NYSE: TOL), Applied Materials (NASDAQ: AMAT), JC Penney (NYSE: JCP), Macy's (NYSE: M), Nordstrom (NYSE: JWN), Hewlett-Packard (NYSE: HPQ), Abercrombie & Fitch (NYSE: ANF).

Visit AOL Money & Finance for more earnings coverage.

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Financial Stocks to Love
The subprime mortgage meltdown and resulting credit crisis have slammed financial stocks recently. But there are still some diamonds in the rough. They include Berkshire Hathaway, RBS, AFLAC, Raymond James and BOK.
Financial stocks we love - CNNMoney.com

Big Mac's Local Flavor
Once vilified for pushing America on the world, McDonald's lets countries invent their own buns, bags, and business practices. Now some ideas are making their way back home.
Big Mac's local flavor - FORTUNE

America's Best Drugstores
Consumer Reports readers rate service, speed, and advice (but too few ask for it). The top rated stores include Medicine Shoppe for independents, Publix for supermarkets and Kmart for mass merchants. The worst rated include RiteAid for independents, GiantEagle for supermarkets and Wal-Mart for mass merchants. The top-rated online drugstores were Walgreens for store websites and CaremarkRx for pharmacy benefit managers.
ConsumerReports.org - Drugstores: Ratings, finding the best store
ConsumerReports.org - Drugstores, which store is best for you?
Top Rated Drugstores Best Online Drugstores

Where to Find the Biggest Savings at Drugstores
Consumer Reports study of prices for four drugs at 13 stores and Web sites turned up big differences in prices. The moral if you pay out of pocket: Call different stores. Costco offered the biggest savings overall. Some Web sites, including AARP.com and Drugstore.com, were also relatively inexpensive, and shipping costs are low or nonexistent. Rite-Aid and Walgreens were the most expensive.
ConsumerReports.org - Drugstores, where to find the biggest savings

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CVS Caremark

Looking through the reported growth rates, you can see that we're talking best-of-breed here. Revenues were up over 60%, and adjusted earnings per share increased over 18%, coming in at $0.55. The Caremark merger has obviously proven to be a good move. Same-store sales rose 3.9%, benefited in part by the early appearance of Easter in March.

According to earnings.com, CVS Caremark basically matched earnings expectations. That's okay, though, I don't think you can hold it against this big brand name. As of this writing, CVS is near a 52-week high. Buying at the 52-week high is always a dicey thing, but if you plan on holding for years, it wouldn't be that much of a concern. Shorter-term traders would need to wait for a pullback. But I like the first quarter results for CVS, and I think the stock is poised to do well over time. And like I said at the beginning, this really may be a stock for the core portion of an individual's investment program -- a true buy-and-hold idea.

Disclosure: I don't own shares in any company mentioned here; positions can change at any time.

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• Apple Inc. (NASDAQ: AAPL) - the technology giant had a pretty good past year and I think it is a great pick;
• Boeing Co. (NYSE: BA) - the aerospace company had to face declining stock price during 2007, but has been seeing a nice rebound recently. With the soaring oil prices though I'm note quite sure that I will be eager to invest my money in BA;
• CVS Caremark Corp. (NYSE: CVS) - the largest U.S. pharmaceutical retail chain saw its shares in a steady ascent but still trades at a modest valuation;
• Genentech Inc. (NYSE: DNA)- the biotechnology company faced tough times that weighed heavily on its shares for the past year;
• JPMorgan Chase & Co. (NYSE: JPM) - the financial company has been under pressure from traders' recession fears over the past months but Marcial sees earnings potential for the stock;
• Petroleo Brasileiro (NYSE: PBR) - is one of the world's largest oil companies; I believe is a good pick as oil prices are poised for further more gains;
• Pfizer Inc. (NYSE: PFE) - the drug company saw its shares plunging for the past year, but with its current plans related to some significant acquisition we may see a nice recovery in the stock.

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This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

CVS Caremark Corp (NYSE: CVS) -- with 6,200 stores and a pharmacy benefits management division -- beats Walgreen Co. (NYSE: WAG) -- with 5,997 stores -- hands down in the battle of the brands. It's bigger, its earnings are growing faster, it has a higher P/E and its stock has grown faster over the last year and five years. Walgreen wins on one measure: it has a fatter profit margin.

Here's how the two score on these measures:

• Revenues. $76 billion (CVS) beats $54 billion (Walgreens)
• Earnings growth. 12% (CVS) beats 6% (Walgreens)
• Profit margins. 3.8% (Walgreens) beats 3.45% (CVS)
• P/E. 21.3 (CVS) beats 17 (Walgreens)
• One year stock performance.+16% (CVS) beats -22% (Walgreens)
• Five year stock performance. +250% (CVS) beats +16% (Walgreens)

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Vote in our poll for CVS or Walgreens as your preferred brand, and let us know in the comments why you love it.

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Rite Aid (NYSE: RAD), I should disclose, is one of my least favorite companies and stocks. Nevertheless, I don't mind checking in on it from time to time when there is news about it. Yesterday, the pharmacy released sales data for the month of March (the data excludes the Brooks Eckerd acquisition). Did they change my outlook on Rite Aid at all?

No, although I should say that this wouldn't be necessarily expected; a month of same-store sales data isn't the killer app of an overall investment thesis for a retail idea. Still, shareholders follow comps religiously, and I have to say that Rite Aid's number was nothing to write home about. A 2.6% gain in sales at stores open more than a year is weak. Walgreen (NYSE: WAG) said earlier in the week that its comparable-store revenues grew by a much better 4.4%. Walgreen was able to take advantage of the Easter shopping excitement in a much better fashion than Rite Aid. It all comes down to brand and execution; Walgreen, as well as CVS Caremark (NYSE: CVS), are more valuable in terms of both those attributes.

I may not have been bowled over by Walgreen's recent earnings release, but I can tell you that Rite Aid's share price is downright frightening and telling -- it's telling people to stay away, or at least understand that it may be essentially like buying a lottery ticket (it closed at $2.89 yesterday). Rite Aid's same-store sales were weak, and so is its investment potential.

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

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MAJOR PAPERS:

• Luqman Arnold, the former UBS AG (NYSE: UBS) president forced out in 2001, wants the firm to split its investment bank from the private client bank, and look at selling the investment bank and asset management business, according to the Wall Street Journal's "Heard on the Street".
• Microsoft Corporation's (NASDAQ: MSFT) bid to acquire Yahoo! Inc (NASDAQ: YHOO) has not gained any steam even though executives of the two companies met this week, the Wall Street Journal reported.
• The Financial Times reported that the landmark merger that created Citigroup Incorporated (NYSE: C) was a "mistake" that failed to benefit the financial services giant's investors, customers and employees, said John Reed, who masterminded the $166B deal with Sandy Weill in 1998. Reed, the former head of Citicorp, has advised Citigroup CEO Vikram Pandit at least to consider spin-offs, sources said.

• Walgreen Co (NYSE: WAG) is branching out by acquiring two companies that provide health-care services, BusinessWeek reported, following in its competitor CVS Caremark Corporation's (NYSE: CVS) shoes. Some investors are wary of Walgreen's move, but Mark Wiltamuth of Morgan Stanley sees it as a new growth avenue and as a push into services complementary to drugstores.

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Walgreen Company (NYSE: WAG) reported earnings for the second quarter on Monday. Net sales grew by a very decent 10%. Diluted earnings per share for the quarter were $0.69 versus $0.65 in the year-ago period; this represents a bottom-line gain of 6%.

Considering some of the other action on Wall Street on Monday -- the increased offer for Bear Stearns, the approval of the Sirius/XM merger -- Walgreen's earnings report was simply an okay event, even though the stock closed up around 5% on the news. Same-store sales may have increased 4.7%, but the retailer sold a lot of items with lower margins this time around, thus reducing its gross-margin metric by 14 basis points (the release did cite a big shift to pharmacy sales in the quarter as having negatively impacted margins). So Walgreen needs to work on its non-pharmacy revenues. One cool thing from the report is the jump in net cash from operations -- that number increased by 10%.

Walgreen, which competes with CVS Caremark Corporation (NYSE: CVS) and Rite Aid Corporation (NYSE: RAD), isn't a bad way to play the long-term drug-retailing business. To be sure, baby boomers -- as well as everyone else -- will always need to visit drugstores on a go-forward basis. It's the company that can capture a significant amount of non-pharmacy sales that will prosper the most. Walgreen and CVS are excellent brand names in this sector -- I'm not so keen on Rite Aid, though (take a look at the stock price and see if you think the company might be cheap-for-a-reason, as they say).

Disclosure: I don't own any shares in any of the companies mentioned here; positions can change at any time.

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Chattem (NASDAQ: CHTT) provides over-the-counter drugs, personal care products and dietary supplements. Offerings include such pain treatments as dental analgesic Benzodent, topical analgesic Aspercreme, muscle pain reliever Flexall, menstrual symptom reliever Pamprin, analgesic Icy Hot and itch medicine Cortizone-10. The company also makes Melatonex and Unisom sleep aids, Gold Bond medicated powder, Selsun Blue dandruff shampoo, ACT mouthwash and BullFrog sunblock. Chattem sells its products in eighty countries, through such merchandisers as CVS Caremark (NYSE: CVS), Safeway (NYSE: SWY) and Walgreen (NYSE: WAG).

The company surprised investors last week, when it reported Q4 EPS of 76 cents and revenues of $100.6 million. Analysts had been expecting 65 cents and $100.5 million. Management also guided FY08 EPS to $4.00-$4.20 ($3.83 consensus).

The stock popped on the news and has since moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the stock with three "strong buys", three "buys", three "holds" and one "underperform". The CHTT Price to Free Cash Flow ratio (18.62), Sales Growth rate (54.53%), EPS Growth rate (137.50%), Operating Margin (28.86%), Net Profit Margin (14.10%), Return on Assets (9.98%) and Return on Equity (35.39%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $49.90 and $80.99. A stop-loss of $66.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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MOST NOTEWORTHY:

• Deutsche Bank upgraded the Retailing Broadline Sector to Neutral from Cautious and believes the worst is over for the retailing sector. The firm recommends long Buy rated CVS Caremark (NYSE:CVS) and Wal-Mart Stores (NYSE:WMT) vs. short Sell rated Sears Holding (NASDAQ:SHLD).
  
• B. Riley upgraded shares of Mips Technologies (NASDAQ:MIPS) to Buy from Neutral on valuation, as they find the risk/reward attractive at current levels.
  
• Alliance Data (NYSE:ADS) was raised to Outperform from Market Perform at JMP Securities following its strong Q4 report and guidance.

• Roche (RHHBY) was raised to Overweight from Neutral at HSBC.
  
• Bear upgraded Nordstrom (NYSE:JWN) to Outperform from Peer Perform.
  
• Wachovia raised Gilead Sciences (NYSE:GILD) to Outperform from Market Perform.

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Couple of tough days ahead. We were overbought going into this Fed decision; now we will have to pay for it, and pay for it big. We have to lose a lot that we gained, expecting that the Fed would work hand-in-hand with the Treasury Department to get us out of this jam.

But that's not going to happen now. You can see what will happen. They will kill the banks again. The fundraising that was going on will be halted. We will get some failures. The homebuilder credit lines? Some will not be extended.

The financials that are teetering? They get pushed.

Then the Pepsi (NYSE: PEP) (Cramer's Take)-Coke (NYSE: KO) (Cramer's Take) rally will ensue, with the Medcos (NYSE: MHS) (Cramer's Take) and the CVSes (NYSE: CVS) (Cramer's Take) and the Hologics (NASDAQ: HOLX) (Cramer's Take).

That comes about by Monday.

And the pain will be palpable.

All of it is easily avoided. I am sure there are people who don't care about the stock market as a barometer of what just occurred.

That's great to take that view. But in the end, a quarter-point of interest rate cut more and we could have successfully liquefied the balance sheets and raised the money so much easier.

Now it is going to be another round of pain and woe.

For what? Why?

Let me know if you can figure it out.

I can't.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long CVS Caremark and Hologic.

RELATED LINKS:

• Kass: 20 Takeaways From the Fed's Move
• Lend Your Money, Turn a Profit

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MOST NOTEWORTHY:

• B. Riley started shares of Kenneth Cole (NYSE: KCP) with a Neutral rating and $21 target, citing a lack of near-term catalysts and the challenging environment for footwear companies.
  
• William Blair resumed coverage of Tempur Pedic International (NYSE: TPX) with an Outperform rating, and finds the current valuation attractive for long-term investors.
  
• Banc of America assumed coverage of Biogen Idec (NASDAQ: BIIB) with a Neutral rating and $79 target, as they see less than 50% probability of a sale at current prices and expect shares to trade back to pre-announcement levels in the mid-to-high $60s if no sale is made.
  
• Cubist Pharmaceuticals (NASDAQ: CBST) was initiated with a Sector Performer rating at CIBC, citing competitive headwinds.
  
• ShoreTel (NASDAQ: SHOR) was initiated with a Neutral rating at Nollenberger on valuation.

• UBS initiated CVS Caremark (NYSE: CVS) with a Buy rating and Rite Aid (RAD) and Walgreen (WAG) with Neutral ratings.
  
• Caris initiated Starent Networks (NASDAQ: STAR) with an Average rating and $23 target.

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