Walgreens Boots Alliance: A Promising Investment Opportunity
Walgreens Boots Alliance, Inc. (NASDAQ:) is a globally recognized retail pharmacy and healthcare company that has recently caught the attention of investors due to its compelling growth potential and attractive valuation. Despite facing stiff competition from various fronts, including online giants like Amazon.com, Inc. and retail behemoths like Walmart Inc. and Target Corporation, Walgreens is making significant strides towards a successful turnaround. Here are four key reasons why investors should consider adding Walgreens stock to their portfolio:
1) The Turnaround Is Taking Shape as Growth Metrics Improve
- Walgreens reported a 6% year-over-year revenue growth, outperforming consensus estimates by $200 million in its fiscal fourth quarter of 2024.
- The company’s pharmacy sales rose 9.6% year-over-year, with strong comparable pharmacy sales up 11% year-over-year.
- Walgreens exceeded its target of $1 billion in cost savings in fiscal 2024 and is planning to shutter 1,200 underperforming stores to boost free cash flow.
2) Its Assets Are Worth More Than Its Market Capitalization
- Walgreens’ current assets are valued at $18.34 billion, which is twice its current market capitalization of $9.33 billion.
- The company operates over 13,000 stores worldwide and has a strong presence in the U.S., with approximately 78% of the population living within five miles of a Walgreens or Duane Reade store.
- Walgreens is a major shareholder of drug and healthcare products distributor Cencora Inc., owning 10% of the company valued at around $4 billion.
3) Its Valuation Is Historically Cheap, With Prices Not Seen Since 1997
- Walgreens stock is trading at historically low levels, with a forward price-to-earnings ratio of 3.79x and a price-to-book ratio of 0.33.
- The stock offers the highest dividend yield in the S&P 500 at 9.25% and has the potential to rebound significantly from its current undervalued status.
4) WBA Stock Is Forming a Cup and Handle Pattern
- Walgreens stock is exhibiting a cup and handle pattern, indicating a potential breakout in the near future.
- The stock has strong support levels at various Fibonacci pullback levels, presenting a strategic entry point for investors.
- Analysts have set an average price target of $13.38 for Walgreens stock, with the highest target at $22.00, signaling substantial upside potential.
Overall, Walgreens Boots Alliance presents a compelling investment opportunity for investors looking to capitalize on its turnaround efforts, undervalued status, and potential for significant growth in the future.