Home » Investing » Recent Buy: The Jean Coutu Group

Recently, I had been looking to initiate a position in what I believe to be a very strong pharmacy-based company in The Jean Coutu Group Inc. (PJC.A). This company operates a network of just over 400 franchised stores. The locations are spread across three provinces: Quebec, New Brunswick, and Ontario, with Quebec holding the vast majority.

The company operates in two operating segments: franchising and generic drugs. Jean Coutu acts as franchisor using a model in which all of their franchisees are also licensed pharmacists. As a result, the pharmacist has a stake in the well-being of the company and taking an owner mindset in their dealings with customers to establish themselves as a cornerstone in the health and wellness plan of customers.

The generic drug segment is named “Pro Doc” and provides generic drug options to Jean Coutu and other Quebec pharmacists. I view this as a way for the company to effectively “double dip” in a positive way, in that they are able to make money from the sale of generic drugs as the producer and then also at point-of-sale (through the pharmacy locations) to end users.

Read the full article on Seeking Alpha.

Full Disclosure: Long PJC.A

Pictures courtesy of pixabay.com

7 thoughts on “Recent Buy: The Jean Coutu Group

  1. Allan says:

    Hi Ryan,

    Jean-Coutu is in fact the first dividend growth stock I bought. I got it at 18,49$ last year in november just before they got rid of their Rite Aid shares so I was lucky enough to get the special dividend of fifty cents per share plus the normal dividend, plus the results of their share buyback program (they bought back a quarter of the outstanding shares with the proceeds of the Rite Aid sell and now look at what price they trade for).

    Finaly, last year, the dividend raise was an amazing 18%.

    Have a nice week-end

    1. Hi Allan,

      Interesting that you started with a low yielding stock for your first purchase. Most people tend to start with a larger payout and only discover the power of low yield and high dividend growth companies later on. I would love to pick some up in the $18 range if the price comes down.

      As concentrated as they are in Quebec, I am eager to see how they can build themselves out across Canada and at least Ontario over time.

      – Ryan

      1. Allan says:

        Hi Ryan,

        When I bought Jean Coutu shares I was seeking for value. I wasn’t quite sure yet that I would fully embrace dividend growth investing. I thought at that time that PJC-a was offering great value to both investors and customers at 18,49$ per share and didn’t care a lot about the dividend growth aspect. I also thought that selling their Rite Aid participation was the thing to do at that point.

        PJC-a is there to stay. They mostly sell drugs, the brand is trustworthy and an icon here and the population is growing older (drugs demand is rising).

        For sure getting more exposure outside of Quebec would be great! I guess it’s part of the plan. Their Rite Aid participation was their way of getting some exposure but it turned out to be a so-so investment. Focusing on what works is sometimes the best thing to do. In Quebec it works very well!

        Cheers

        1. It’s funny how things work out; you buy for one reason and wind up holding for another. I agree with your reasoning on the company and hopefully we can both be using their dividends for good purposes for decades to come!

          – Ryan

  2. DivHut says:

    Love coming here and to other blogs to learn about new companies. I have never heard of The Jean Coutu Group but you have intrigued me to look into it. Generic drugs are such a good business. I have been following off and on TEVA for a while but never bought into it. Thanks for sharing.

    1. I’m glad you liked the read!

      Jean Coutu is very well known and respected in the markets it operates. What I never realized until I actually did my research on the company was, like you mentioned, that the company also has a generic drug segment. That was icing on the cake for me as I was mainly interested in the successful pharmacy side of things.

      I didn’t get into possibilities for the company to expand more aggressively outside of Quebec, though that would be an interesting proposition if they were able to pull it off with a lot of potential. Having initiated a position, I’ll be looking forward to see how this plays out going forward.

      – Ryan

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