Dear Mr. Berko: I'm thinking of buying 10,000 shares of Rite Aid at $1.30. If the stock runs up to its 52 week high of $5.22, I could make nearly $40,000 in the coming 12 months. What do you think of this for a one-year gamble? I read that it is your policy not to endorse a presidential candidate, but is there a candidate running for Congress you would endorse? — D.G., Harrisburg, Pa.

Dear D.G.: The only political candidate I'd be comfortable endorsing is Dr. Jack Kevorkian, the pathologist who when not transfusing blood from corpses used to assist folks wanting to commit suicide. The cadaverous 79-year-old, who was released from prison last year and is currently on parole, intends to run for Congress and represent Michigan's 9th Congressional District. The reputation of Congress has sludged to an all time low and Dr. Death would certainly improve its image. He might even assist some members of Congress wanting to do right for their country.

Rite Aid (RAD-$1.22), with 5,060 drug stores and $27 billion in revenues, is the third largest drugstore chain in the nation. No. 1 is CVS Caremark's (CVS-$37.24) 6,300 locations and $88 billion in sales followed by Walgreen's (WAG-$36.87), with 6,000 units and $60 billion in revenues.

Sadly, the folks who run Rite Aid couldn't manage a two-car funeral. Chairman, CEO and President Mary Sammons, CFO Kevin Twomey, and Executive Vice President Jerry de Bruin strategized and schemed the takeover of 1,850 Eckerd drugstores in June 2007, which should have been a no-brainer. The acquisition increased RAD's revenues by 50 percent, but unexpected legal issues, integration costs, billing SNAFUS, inventory problems, management troubles, accounting write-offs and capital demands, unexpectedly stacked up like uncollected newspapers on a vacationer's door step.

So RAD will have larger losses this year growing from an expected loss of 18 cents to an unexpected loss of 35 cents a share. However, thanks to inflation, Sammons can boast that same-store sales actually increased by 1.3 percent in the last dozen months. So that's a daisy on her bonnet!

By way of comparison, during the same period, CVS's same store sales increased 47 percent and earnings rose 23 percent and WAG's same store sales grew 4.4 percent and net income increased 10 percent.

RAD, headquartered in Camp Hill, Pa., peddles the same notions, lotions, potions, powders, pastes, prescriptives, twaddle and nonsense gimcrackery sold by CVS and WAG, and RAD sells this stuff at basically the same price. All three drugstore chains maintain similar store hours, are similar in size and carry nearly identical inventory. So the fault must lie with Ms. Mary as well as Messrs Twomey and de Bruin, the three bootless bozos who run RAD.

Camp Hill is a small town, just 3,600 households, and if I were a RAD officer I'd be embarrassed to the marrow to show my face publicly at a diner, supermarket or a high school sporting event. During eight of the past 11 years this multi-billion dollar company has been floating in red ink, and Wall Street expects RAD to pour more red ink in 2009. RAD's management couldn't grow thorns in a briar patch and its public relations and marketing departments are so dumb they need a diagram to lick ketchup off their lips. The balance sheet is sagging under a massive 77 percent total debt to equity ration and, given the troubles of its blotched Eckerd acquisition, RAD will need an act of God to improve its financial flexibility.

However, I'm in total agreement with you. If you bought 10,000 shares and if the stock rose to its 52-week high price and if you sell those 10,000 shares at that high price you will make a cool $40,000. That's an incontestable certainty. I think there's a better chance of the Resurrection in the coming 12 months than there is that RAD will run up to $5.22 a share. RAD could move up nicely if management could turn things around at Eckerd's. But the poor souls who are running the show in Camp Hill certainly don't have the moxie or savvy to do it.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at malber@comcast.net. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2008 CREATORS SYNDICATE, INC.

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