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Trade-Ideas: Walgreen (WAG) Is Today's Unusual Social Activity Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Walgreen ( WAG) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Walgreen as such a stock due to the following factors:

  • WAG has more that 20x the normal benchmarked social activity for this time of the day compared to its average of 9.29 mentions/day.
  • WAG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $392.9 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in WAG with the Ticky from Trade-Ideas. See the FREE profile for WAG NOW at Trade-Ideas

More details on WAG:

Walgreen Co., together with its subsidiaries, operates a network of drugstores in the United States. It provides consumer goods and services, pharmacy, and health and wellness services through drugstores, as well as through mail, and by telephone and online. The stock currently has a dividend yield of 1.7%. WAG has a PE ratio of 26.2. Currently there are 12 analysts that rate Walgreen a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for Walgreen has been 5.8 million shares per day over the past 30 days. Walgreen has a market cap of $71.1 billion and is part of the services sector and retail industry. The stock has a beta of 1.19 and a short float of 2.2% with 3.57 days to cover. Shares are up 28.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Walgreen as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • WALGREEN CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WALGREEN CO increased its bottom line by earning $2.56 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $2.56).
  • Compared to its closing price of one year ago, WAG's share price has jumped by 50.08%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • WAG's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that WAG's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Food & Staples Retailing industry and the overall market, WALGREEN CO's return on equity is below that of both the industry average and the S&P 500.

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