Find a penny, pick it up. All day long you’ll have good luck. Or so the saying goes… but does a penny really have any value today?

With high commodity prices, investors might be able to make a nickel by smelting the penny and reselling the copper! Otherwise, a penny just doesn’t buy you much today with inflation rising. And that is exactly why more shoppers are hitting the discount chains more and more (see “World Take-Over by Wal-Mart and Costco”).

But can a regular old retailer like Walgreen Co. (WAG)–formed back in 1901–make it in this difficult operating environment? The answer appears to be yes. The nation’s largest drugstore retailer announced a 2% profit increase for its 3rd quarter fueled by a 10% gain in revenues, all the while battling it out with CVS Caremark (CVS) for the top spot in drug retail.

WAG: The RX for Growth

Walgreen’s gains are a result of strict cost management and an increase in prescription drug sales. The stock opened higher today on the news as the CEO for WAG predicted better things coming down the road.

And, just what might that be?

Aging baby boomers and deteriorating health are expected to provide huge growth to WAG in the future.

With the stock trading for a reasonable valuation on prior weakness, this quarter may be an excellent time to build a position around WAG. Shares trade for a modest valuation with its forward Price-to-Earnings less than its forward Price-to-Earnings. That means you can buy growth at a discount. Add in those baby boomers and all of their drug needs, and investors get a healthy dose of Walgreen profit!

Shares are weaker on poor execution over the last two quarters. Shares trade for 0.6 times sales and 2.88 times book value. WAG pays a solid 1% dividend, and its balance sheet has minimal debt.

This coupled with Walgreen’s plans to open 7,000 more outlets by 2010 make it the perfect prescription for growth.

Richard Band, editor of Profitable Investing also has high hopes for Walgreen’s growth potential! To get his WAG buy price as well as his latest outlook for other popular drug store retailers (namely WAG’s top competitors), sign up right now for your very own six month, risk-free trial subscription to Profitable Investing! Richard Band’s recommendations for conservative investors have grown 900% since 1984! Don’t miss out! Get started today!