A lot of investors have been crunching the numbers on Rite Aid (NYSE:RAD) lately with the thinking that the stock is a bargain based on the prices Walgreens (NYSE:WBA) is paying Rite Aid for 1,932 stores and three distribution centers. In addition, investors are often quoting the value of the PBM that Rite Aid owns and coming to the conclusion that the stock is a bargain based on its discount to liquidation value. While I agree that the company looks very cheap on the surface, I believe these investors are failing to account for the potential that still exists that Rite Aid continues to suffer declining sales. The stock feels similar to a lottery ticket. While that may appeal to aggressive traders and investors, I believe the more rational trade is the 2027 bonds which currently trade for 81 cents on the dollar with an 11% yield.

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