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Is Walgreen Boots Finally Done Falling?

Long
NASDAQ:WBA   Walgreens Boots Alliance, Inc
Walgreen Boots Alliance has trended lower since mid-2015. However now it could be showing signs of a historic turn.

The first thing that jumps out on this chart is the false breakdown in late October, followed by signs of a higher low this month. Notice how WBA knifed under $34 before spiking back above $44.

Next, where are prices stabilizing? The current level around $38 is important for two reasons. First, it roughly matches the peaks October 16-23. Second, it’s on top of the downward sloping trend line . That means WBA could be finding new support at old resistance.

Third, the 50-day simple moving average ( SMA ) has turned positive and the stock is now bouncing at it.

Stochastics show an oversold condition as well.

Finally, the long-term momentum has been improving. MACD has been rising on the weekly chart for more than a year – even as prices made lower lows. That’s bullish divergence .


WBA fell last week after Amazon.com launched its Pharmacy service. However the fundamental story showed a surprising turnaround last quarter. Speaking of fundamentals, WBA's forward P/E ratio is in the single digits. That makes it a potential “value stock,” which is the kind of name investors are now seeking.

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Comments

Nice chart. I think this should do great during a pandemic with the government attempting to figure out a vaccine. Looks like it can run short term into 45
+1 Reply
Hi!


Since your post is about value investing, I think the answer for this stock is a NO. Here are the reasons, why:
- Book value is declining 2 years in a row
- Net income is seriously falling while revenue is growing
- EPS is falling, it is less than the dividend paid
- Right now the share is overpriced, above the limit price suggested by Ben Graham, Warren Buffett (PE x Price/Bookvalue < 22.5)
- The company just got seriously indebted in the recent financial year. Debt to equity ratio is almost 2 (the company has 2 times more debt than equity)

All these points make this stock/company a risky investment for the long run. Might be an applicant for short term trading though.
Reply
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