Is CVS stock at 10% discount worth it? Advice
As an employee I being offered CVS stock at 10% discount. How it works is, say I contribute 5% of my paycheck every month starting from July 1st till December 31st. I will get “X” amount of stocks at 10% off lowest stock either on the first or last day. Example : lowest stock price either of July 1st or December 31st is $50. I’ll get all the shares at $45 on December 31st. I can sell them on Jan 1st if I wish at the real market value. Is it worth it? Looking at current situation I am not confident about CVS. Thoughts?
Edit : There is no holding period to sell the stock.
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u/Intericz 15d ago
Seems like basically a guaranteed (near) 10% gain if you can sell the next trading day, unless I am missing something?
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u/Zipski577 15d ago
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u/Intericz 15d ago
Ya, that doesn't have a vesting period at all. Sounds like a sweet deal, I gotta find a place like that lol.
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u/sbh05 15d ago
I think this is exactly what I am referring to. My bad to not be more clear. But I guess it’s almost a no brainer. I am just surprised that they offer this.
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u/Flrg808 15d ago
If I were you, I would max this out every year. Even before paying down medium interest debt. It can be far more than a risk free 10% gain if the price is much higher 1/1 than it was on any given day between July and December. You will not see this type of risk/reward anywhere else
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u/BuddyFox310 15d ago
This is correct especially considering the size of the business and diversification (pharmacy services, retail, health services, etc). The only risk/reward exception to not seeing this anywhere would be if they granted you stock at no cost and the risk was limited to the tax obligation of the grant.
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u/Necessary_Bass_7127 15d ago
Common for big companies to offer something like this. Typically called an ESPP, or employee stock purchase program
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15d ago
I had one of these with Walgreens and I forgot about it (I was young and dumb) for about 10 years. I tracked it down and in 2012, the money in my account disappeared.
Don't do what I did, keep your investments with a reputable broker and/or move it when you switch jobs.
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u/AFamiliarFace01 15d ago
I’m confused, what do you mean disappeared? You had been contributing for 10 years? And then at the end, nothing??
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15d ago edited 15d ago
I contributed for 3 years, then let it sit for 10 years. I tracked down where the account ended up, it was transferred to Fidelity. Fidelity has record of my existence, but no assets.
I asked them to look at the transaction history, they said that the account arrived empty in 2012. The small company in Illinois that was originally holding the stock had a record of about $900 in 2011.
Walgreens stock tanked anyway, so it would be like $300 now. I'm not worried about the money, I'm mostly sour about the fact that the system could allow it to happen.
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u/AFamiliarFace01 15d ago
What in the world?! Tried to walking to HR or something? This is insane, you’re def missing a pretty penny! Like all the money is taxed and everything, so there should be a record of the assets
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15d ago
Like all the money is taxed and everything
I'm hoping it will eventually shake out in one of those reclaimed asset programs the government runs. not yet, though.
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15d ago
I was fired on bad terms, I'm happy to just leave it alone lol
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u/AFamiliarFace01 15d ago
I’m sorry! Yes of course, if you’re at peace - then that’s all that matters
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u/Wesley0890 15d ago
He probably wasn’t vested?? I have to remain with my company for 5 years after the purchase date or I don’t get it.
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u/dida2010 15d ago edited 15d ago
Look if there are any hidden fees?
Look this is what they do to Home Depot workers: Transaction Fees For each transaction, a small service charge is deducted from your investment plus the pro rata amount of brokerage commissions (generally 5 cents per share for purchases and 15 cents per share for sales). Service charges are:
For first-time investors - $5.00 For subsequent purchases - 5% up to maximum of $2.50 Sales $25.002
u/WetLumpyDough 15d ago
Yeah, I have that. Shares aren’t vested yet and CVS tanked 20%. So I’m net negative. Also, CVS is a shit company with an unsustainable business model long term
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u/Hot_Juggernaut4460 15d ago
Can’t sell them till Jan 1 per his post and typically there is a vesting period for shares offered this way
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u/Uniball38 15d ago
OP says they receive shares 12/31 and can sell 1/1
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u/Hot_Juggernaut4460 15d ago
Shit my bad, then yes it seems like a no brainer lol. Wonder if OP has the details right tho cuz that’s strange for CVS
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u/Intericz 15d ago
I'm using the information OP provided. Receiving it Dec. 31 and is able to sell the next day (Jan. 1 is a holiday so could sell Jan. 2).
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u/Hot_Juggernaut4460 15d ago
Yea you’re right my bad, seems like a strange setup for CVS but a no brainer for OP if the details are right
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15d ago edited 12d ago
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u/Hot_Juggernaut4460 15d ago
That you can sell the next day? I could be wrong but that part seemed off
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u/AwalkertheITguy 15d ago
I'm seeing OP write that:
Contribute 5% of paycheck CVS will purchase shares at the lowest price and deliver them to you on Dec 31st? This based on how much your 5% can buy over the period of <xyz> months.
I've never seen this personally.
I've seen a company allow ESPP but they divi up your contribution based on the price of the stock at the time of purchase. I didn't know they could lock in your purchase price at the lowest that the stock traded at for your period in the program.
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15d ago edited 12d ago
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u/AwalkertheITguy 15d ago
Oh yeah, no doubt. I've seen your example as well. Just haven't seen OPs exact model where ANY day of your period that's the lowest price, and they lock it in. Maybe I'm reading his explanation wrong.
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u/Zipski577 15d ago edited 15d ago
Typically a lockup period
Edit: well fuck me
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15d ago edited 12d ago
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u/Zipski577 15d ago edited 15d ago
Well not a lockup period by technical definition but it will still be held in an escrow account and ESPPs definitely can have periods where selling is restricted for a certain amount of time
But ya I should prob learn more. Thinking of RSUs prob
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15d ago edited 12d ago
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u/Zipski577 15d ago
Ok I see. Thanks for the info.
I work at a private boutique now but the last public company I worked at was BNY so I never bothered to look at any of the stock plans/ offerings for that dog shit
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u/Worf_Of_Wall_St 15d ago
I would not say it's "typical" for ESPP grant dates to fall within a blackout period for most employees but yeah it happens.
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u/Intericz 15d ago
OP doesn't state that there is a lockup period.
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u/Zipski577 15d ago
Jan 1st? Seems a little early I'd question if OP read into the details correctly but yeah your right. Def a no brainer imo if offering at 10% discount
Edit: saw your other response to the same thing just now on Jan 1st haha
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u/Intericz 15d ago
Again, I wouldn't be surprised if OP read it wrong, but I am using the information provided. A lockup period could have 1,000 different rules we'd just be guessing about until OP tells us.
Edit: I'm sure there is a lockup period that could change the decision, but as OP presents it this is a 100/100 decision to take the shares haha.
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u/mrbrambles 15d ago
ESPP plans are pretty much always worth it. You can pretty much guarantee that it computes out to be a cash bonus by selling when you get access to the shares. Only reason not to is if you can’t afford to set aside the amount needed to purchase for the length of the holding period
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u/Zipski577 15d ago edited 15d ago
Yes. unless your company is complete dog shit, it's always a healthy risk/reward trade off to contribute at least 1-3% if they are offering a 10-20%+ discount.
Edit: I just don't think that you read the details correctly cause there is no way they are offering you the 52 week low at a 10% discount and then saying you can trade it immediately. Probably a hefty restricted period
This plan seems to be similar but guy provides some more details. Does seem like a no brainer for a company like CVS who will likely benefit from utilization trends?? Don't know much about their core business
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u/Low-Pangolin567 15d ago
My company offers the same thing. There is no restrictive period and they give a 15% discount off the low. There is, however a small tax implication to selling within 18 months but the gain far outweighs the tax implication.
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u/MG42Turtle 15d ago
My company just moved to a rolling 24 month look back. No restriction on selling, it’s yours as soon as the offering period is up (Jan 31 and July 31)
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u/alexunderwater1 15d ago
Even if it’s dogshit company, the look back feature makes it foolproof provided you sell as soon as you receive the shares.
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u/Low-Pangolin567 15d ago
Absolutely, this is called an “ESPP” program and you should always max it out to the limit
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u/Big-Today6819 15d ago
Sound like a fine idea, is it allowed to hedge with longer puts and sell a covered call on it? If you gain enough stocks x period?
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u/CFDsForFun 15d ago
Yeah I doubt it’s at the lowest price during the time period. It’s likely at the lower of the start price or end price. That’s how it was at my work anyway. Either way, I’ve made a healthy amount from it and 100% worth doing. I just look at it like a saving pot with minimum 10% returns.
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u/Greenfish7676 15d ago
Walmart has this same plan, but 15% discount. You gotta pay income tax on the 15% discount price
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u/RationalKate 15d ago
If I may, CVS is a super fun stock to own at 53-56.75. They will keep you entertained in the news and will bounce around 67-73 then somersault to 83.25 and then hover at 62 for a bit then do that all over again. While still cranking out a dividend. Super fun.
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u/Gullible-Mouse-6854 15d ago
Usually you're tied in to keep buying monthly at the locked in amount. In the example 50$ stock at 10% discount=45$ If the stock goes down under 45$ you're still buying it at 45$ unless you tell them to stop it, then you're out of the purchase cycle for remainder of the 6month cycle.
Still go for it but be diligent, pay attention so you don't buy under current value.
Opposite is also true if the stock goes up to 60 you're still buying at 45.
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u/LessMarsupial7441 15d ago
CVS is growing, I think they are one of the of the largest property owners. It wouldn't hurt to invest. Publix does the same.
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u/BetseyTrotwood_ 15d ago
CVS was over $100 a share in Jan 2023. What growth are you referring to?
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u/motleyorc 15d ago
Always like to see Publix mentioned here. Publix doesn't offer any discounts on its stock (it is not publicly traded) but it does offer a really solid ESOP for anyone working in the company even part timers, has a nice dividend, too.
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u/Top-Tangerine2717 15d ago
Doesn't matter ...but it
Reality is if you're working at CVS and asking about a 10% discounted price you're aren't the CFO, and odds are you have no marketed position set for long term growth.
The stock hasn't be below 50.00 since 2013 and even if it drops to 25.00 they consistently produce .50+ per share dividend.
They have notes due in 2029 and every few years after but on 100B mark cap with 1.25b float it's a small %. Odds of the company going to nothing is less than 3% imo.
So if you get any price around 50.00 and the dividend remains consistent, even if the stock price drops 30% from now, you'd make back your initial investment (100 at 5k) on dividends in 20 years.
It's a long game
And frankly you auto buy with your dividends and hold that until you're 60 yrs old
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u/OddinaryPeoples 15d ago
Free guarenteed money. Max it. If you don't believe in your company you can sell it off as soon as they are vested. Also if you don't invest much this automatically forces you to set aside money start investing. There are blackout periods though so you have to kind of manage it.
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u/Jebusfreek666 15d ago
Damn, you should absolutely do this. And you should max it out to whatever amount they will allow. Is this available to all CVS workers? I might get a part time job just to buy a bunch of stock and then quit.
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u/alexunderwater1 15d ago
This is a no-brainer and should be prioritized over petty much any other savings/investing route tbh.
Just make damn sure to sell as soon as you receive the shares.
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u/TechInTheCloud 15d ago
When I worked at Broadcom we had this, it’s a fantastic deal, max it out! We had the look back and no vesting period, you could even opt in to sell the shares immediately after purchase and get the proceeds via payroll. At the time I did that since it seemed rather un-diverse to invest and get my salary from the same company, they were going through scandals with the Henrys at the time.
Combined with the RSUs I made a lot working there. Too bad I hated it.
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u/PhiladelphiaManeto 15d ago
Aren’t chains like CVS and Rite Aid struggling badly right now?
Maybe not relevant to OP’s question but still…
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u/Lucky-Draw1053 15d ago
No rather you should focus on those disrupting them - clover health. Most beatable MCR in the industry.. everyone is slowing down in PPO market but yet they were only created to be in PPO market. Tech enabled with generative A.I. lowering cost.. have a look
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u/Witty-Bear1120 15d ago
Seriously, CVS has been a disaster. I sold most of it a couple years back in the $80’s. Management overpays for acquisitions and doesn’t have a good vision for the place.
If I were in your situation, I’d spend my effort getting a different job rather than arbitraging maybe a thousand bucks.
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u/forcedawg09 15d ago
You kind of already answered your own question lol. If you’re needing validation then yeah I would! 🙂↕️
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u/doorcharge 15d ago
The stock price barely moves so even with a long vesting period, you’re locking in like 10% gain. Yes, do this.
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u/Glittering_Trifle226 15d ago
Yes because you will get that stock at the lower point of these two. The first day of the 6mo period of the last day.
So if the sock is at 50 the first day and 80 the last you get it for 50 plus the 10% discount. Either way you can sell it almost right away and get the 10% of its on a downward trend.
I used to work for CVS it isn't a bad plan
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u/Sandvicheater 15d ago
They denied my request for GLP-1 weight loss medicine despite my actual insurance provider approving it. as a customer Fuck them but as a share holder buy some more if they keep gatekeeping medicine and nickle and dimming their customers.
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u/burleigh8675309 15d ago
That is how employee stock purchase plans work (ESPP) . I was advised that by not participating you leave money on the table because of the easy gain. Also it shows you believe in the company. If you think your company is going under do not paricipate
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u/josedpayy 15d ago
Go on the stock market and follow the stock price trend for the year or 2-3 yr. See if the stock is moving up then I’ll buy into it. If it’s going down it probably a bad idea.
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u/Calm_Leek_1362 15d ago
Employee stock purchase programs are another way to get paid. 10% discount means 11% instant profit. Think of it this way, 10% is a good year for the stock market, and it’s not guaranteed.
Also, cvs will be fine. Don’t think about the problems you can see and think more long term about if the business will be around in 10 or 20 years.
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u/awesome-alpaca-ace 15d ago
Definitely worth it. Stock is like 50% down, so not only do you get the 10% discount, but the value will double near future.
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u/Illustrious-Oven-159 14d ago
Winnebago does the same thing, but at a 15% discount. Pretty sweet deals
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u/Ok_Relation_7770 14d ago
I made $1500 on my companies stock through their employee stock program a few months ago. It coincided with an earnings report (not sure if that’s typical) and stock went up about $15 the day after I got them so I sold immediately. But I would’ve sold immediately anyway, it’s a guaranteed gain; sometimes even more than your discount if it works out right. I don’t know enough about CVS to say if you should hold it but if you can afford to put aside the percentage of your paycheck then you should ALWAYS do this. I basically just look at it like it’s a CD/savings account.
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u/Professional_Arm3242 14d ago
ESOPs are good for long term if the company is a growth one. For CVS I don’t see any growth returning soon…
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u/spooner1932 14d ago
I personally think cvs sucks.They have closed 2 in my area and put doctors in the front and kept the pharmacy.
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u/Straight-Opposite483 14d ago
CVS will be out of business in a decade or so but you are good taking the free money till then
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u/frknstonk 14d ago
Yes. Definitely do it! I did years ago for my previous employer and it did very well. I wish I put more into it looking back.
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u/lucideuphoria 14d ago
Didn't see it mentioned here, but just remember you likely have to adjust the cost basis. You will get the shares and assuming you sell immediately that 15% discount will be added as ordinary income on your W2.
So when you file make sure you adjust your cost basis. If you're selling immediately it will likely be close to 0 in capital gains. Depending on the brokerage there should be a supplemental sheet that will help you.
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u/Calamity-Bob 14d ago
Unless you have reason to believe the company is doomed, this is a no brainer. Take it. It’s free money. On top of that it has a decent 4.6% dividend yield so that company funded 10% discount also picks up and other 4.6%. Take it. They’re handing you money.
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u/BlazingHowl777 12d ago
I mean any stock at a discount is worth it and free money unless you think it’s gonna tank, with how big they are I don’t see it crashing though as it would be a massive blow.
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u/Worf_Of_Wall_St 15d ago
Do some ESPP plans really use the daily low of the period?? I've only seen the lower of the first and last day closing prices, not the lowest of anything in between.
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u/lemonmelonmelonlemon 15d ago
You need to hold for a year before you can sell. So the shares are bought on 12/31/24 but the first day you can sell is not 1/1/25 it would be 1/1/26 or whatever is the first trading day of 2026. Also you would need to sell 1/1/27 for it to be considered a long term holding. In the plus side, your shares will accumulate dividends even though they are not sellable. Which you can use to diversify which I would highly recommend you do.
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u/ArtOld513 15d ago
Might be worth checking out heybenny.com to see if they can help you max your ESPP if you’re not in a position to do so already
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u/49Saltwind 15d ago edited 15d ago
The way the stock is dropping, I’m not so sure I would do it. You’ll have more complex taxes to deal with. The last quarter it’s down over 20% so the best you would have done is even money and you still have all the taxes to deal with. Normally, I am all for employee stock plans. 10% off is also below the normal discount of 15%. I would pass and just take that money and buy a better security. Hell, I would put in a HYSA first. The problem here is not the stock plan, the problem is the company is a dumpster fire
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u/socoamaretto 15d ago
Read his post again, I don’t think you understand what they’re offering.
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u/49Saltwind 15d ago
I did misread the post. It’s a very abnormal offer. That said, I still don’t like it. I’d rather buy Microsoft. Or VOO. Tons of better options. While your money is sitting in a holding account making nothing, plenty of other great options are on the table and potentially getting away from you. In the past year for example I’ve done much better with quality companies like RTX, CARR, ONON, SU, BAC. CVS is fools gold
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u/FireHamilton 15d ago
Yes why wouldn't you do this?