Following Einhorn: Walgreen (WAG) Looks Like a Good Buy

Today we want to take a look at drug store Walgreen (NYSE: WAG), a stock Greenlight Capital, a hedge fund fun by value investor David Einhorn, just recently disclosed they built a new 2 million share stake in.

Greenlight has $4 billion in assets and boasts annualized returns of 27% going back 10 years.

Walgreen, a once Wall Street darling, has seen its shares trade near 52-week lows as disappointing results have impacted the stock.

Here are some reasons we like this trade from Einhorn:

1. Valuation - WAG is trading at about 16x 2008 estimates, versus a 3-year mean of 22x.

2. Defensive stock - Drug retail is typically a good place to be in a rough market

3. Cost - The company is looking to control costs.

4. Comps - WAG should see easier comparisons.

[lj]

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