As COVID-19 cases start increasing again, drugstores are likely to see a bump in revenue. So, CVS Health (NYSE:CVS) and Rite Aid (NYSE:RAD) should benefit. But which of these two stocks is a better buy now? Read more to find out.CVS Health Corporation (CVS) provides health services in the United States. It operates through three segments: Pharmacy Services; Retail/LTC; and Health Care Benefits. The company operates approximately 9,900 retail locations and 1,100 MinuteClinic locations. On the other hand, Rite Aid Corporation (RAD) operates a chain of retail drugstores. It operates through two segments, Retail Pharmacy; and Pharmacy Services. The company operates approximately 2,500 retail pharmacy locations in 17 states.
With the resurgence of COVID-19 cases and rising concerns over the highly transmissible omicron coronavirus variant, the drugstore industry is expected to witness high demand. Also, the industry is usually a steady performer, given an almost inelastic demand for drugs. According to a report by Research and Markets, the global pharmaceuticals market is expected to grow at a CAGR of 8% from 2021 to 2025. Therefore, both CVS and RAD should benefit.
CVS has gained 18% over the past three months, while RAD has negative returns. Also, CVS’ 36% gains over the past nine months are significantly higher than RAD’s negative returns. Moreover, CVS is the clear winner with 44.7% gains versus RAD’s negative returns in terms of year-to-date performance.