CVS ESPP

[hajenkin]

Enrollment is about to begin in the CVS ESPP. Have any of you signed up for this benefit? What are your thoughts/opinions?

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[mentos]

Look at how CVS stock has done in the past 5 years. You're better off buying an S&P. With ESPP you can't sell for 18 months, not worth it.

 

[BMBiology]

What is CVS holding period? If you can buy and sell right away then that is an easy way to make some money.

 

[Dr Wario]

There is a lot of built in downside protection in the stock, for example the last purchase (made in January 2020) had a share price of 49.44 (current is approx $61) with 10% discount off of the lesser of the first or last day of the six month trading period. I would say that since the stock has taken a large beating recently without major decline profitability, seems like a fairly good/safe bet to me.

 

[BMBiology]

There is a lot of built in downside protection in the stock, for example the last purchase (made in January 2020) had a share price of 49.44 (current is approx $61) with 10% discount off of the lesser of the first or last day of the six month trading period. I would say that since the stock has taken a large beating recently without major decline profitability, seems like a fairly good/safe bet to me.

When can you sell them?

 

[mentos]

When can you sell them?

18 months. If you enrolled anytime between 2015-2018 then you got burned badly cause all of their big wigs do insider trading right before you are eligible to sell. Their stock is garbage.

Cvs Health Corp (CVS) Presiden - GuruFocus.com

GuruFocus Article or News written by hollywood1450 and the topic is about:

www.gurufocus.com

CVS Insiders Sell $100 Million in Stock

The CEO and CFO have joined in the year-to-date selling, which includes large September transactions.

www.barrons.com

Compare the stock prices before and after they sold.

 

[farmadiazepine]

Garbage stock, and garbage company. I heavily invested with ESPP from 2011 to 2014. When I left, I removed all my money at the first chance I got. In my option, avoid ESPP now. If you truly believe CVS has a bright future and the stock price can at least remain the same or go up, go ahead and do it. I don't believe that, though.

 

[jballer91]

Actually the whole 18 months waiting period is a misconception (that CVS doesn't really make clear). They say you need to wait 18 months to transfer the stock to another brokerage but nothing stopping you from selling it and cashing out immediately. Also the 18 months is beneficial for tax purposes in some cases; it would be a "disqualifying disposition" if you sell before that time frame so you'd have to maybe pay more taxes depending on what the stock did during the offering period. BUT, if the stock goes goes down while you're waiting, then that offsets those "tax savings" (which may not be as much as you think anyway). Remember, if you're paying taxes when selling stocks, that's good, because you've made money. If you sell the CVS stock right when you get it, you're guaranteeing at least a 10% gain and you're just paying income tax on the difference between what you paid and what you would have paid if you were a regular stock buyer (but you're still making a net positive!)

Someone correct me if I'm off base somewhere of course.

 

[BMBiology]

Actually the whole 18 months waiting period is a misconception (that CVS doesn't really make clear). They say you need to wait 18 months to transfer the stock to another brokerage but nothing stopping you from selling it and cashing out immediately. Also the 18 months is beneficial for tax purposes in some cases; it would be a "disqualifying disposition" if you sell before that time frame so you'd have to maybe pay more taxes depending on what the stock did during the offering period. BUT, if the stock goes goes down while you're waiting, then that offsets those "tax savings" (which may not be as much as you think anyway). Remember, if you're paying taxes when selling stocks, that's good, because you've made money. If you sell the CVS stock right when you get it, you're guaranteeing at least a 10% gain and you're just paying income tax on the difference between what you paid and what you would have paid if you were a regular stock buyer (but you're still making a net positive!)

Someone correct me if I'm off base somewhere of course.

If you can sell them right away then that is an easy > 10% profit assuming the stocks are deposited in your account in a timely manner.

 

[mentos]

Actually the whole 18 months waiting period is a misconception (that CVS doesn't really make clear). They say you need to wait 18 months to transfer the stock to another brokerage but nothing stopping you from selling it and cashing out immediately. Also the 18 months is beneficial for tax purposes in some cases; it would be a "disqualifying disposition" if you sell before that time frame so you'd have to maybe pay more taxes depending on what the stock did during the offering period. BUT, if the stock goes goes down while you're waiting, then that offsets those "tax savings" (which may not be as much as you think anyway). Remember, if you're paying taxes when selling stocks, that's good, because you've made money. If you sell the CVS stock right when you get it, you're guaranteeing at least a 10% gain and you're just paying income tax on the difference between what you paid and what you would have paid if you were a regular stock buyer (but you're still making a net positive!)

Someone correct me if I'm off base somewhere of course.

I don't know if it's like that now but when I did it there was no option to sell immediately. If you tried to sell your balance available showed zero until 18 months passed. I did an ESPP at a different company unrelated to pharmacy and it was like that too. Why would CVS give a guaranteed 10% profit to its employees?

 

[BMBiology]

I don't know if it's like that now but when I did it there was no option to sell immediately. If you tried to sell your balance available showed zero until 18 months passed. I did an ESPP at a different company unrelated to pharmacy and it was like that too. Why would CVS give a guaranteed 10% profit to its employees?

Actually no hold restriction is common. The company gets a no interest loan from its employees. It encourages employees to have some skin in the game. Not all employees will sell right away because of the tax benefits.

 

[owlegrad]

I don't know if it's like that now but when I did it there was no option to sell immediately. If you tried to sell your balance available showed zero until 18 months passed. I did an ESPP at a different company unrelated to pharmacy and it was like that too. Why would CVS give a guaranteed 10% profit to its employees?

Isn’t the 10% discount the same no matter how long the employee holds the stock? The discount is applied at the time of purchase not selling, right?

 

[farmadiazepine]

If you can sell them right away then that is an easy > 10% profit assuming the stocks are deposited in your account in a timely manner.

You can sell anytime. There is no holding period. Assuming the price stays the same over the 6 month period, you will always come out ahead.

 

[mentos]

You can sell anytime. There is no holding period. Assuming the price stays the same over the 6 month period, you will always come out ahead.

That's a big assumption. Look at how much the stock has dropped since 2016.

 

[BMBiology]

That's a big assumption. Look at how much the stock has dropped since 2016.

Either way you get the lower price - Jan 1st or June 30 price. As long as the shares are moved into your account in a timely manner, that is a guaranteed > 10% return.