Watch For Today's Momo Momentum Stock: Walgreens Boots Alliance (WBA)
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
(
) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Walgreens Boots Alliance as such a stock due to the following factors:
- WBA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $435.8 million.
- WBA has a PE ratio of 38.8.
- WBA is currently in the upper 30% of its 1-year range.
- WBA is in the upper 25% of its 20-day range.
- WBA is in the upper 35% of its 5-day range.
- WBA is currently trading above yesterday's high.
- WBA has experienced a gap between today's open and yesterday's close of 0.8%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.
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More details on WBA:
Walgreens Boots Alliance, Inc., 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 1.6%. WBA has a PE ratio of 38.8. Currently there are 9 analysts that rate Walgreens Boots Alliance a buy, no analysts rate it a sell, and 9 rate it a hold.
The average volume for Walgreens Boots Alliance has been 4.7 million shares per day over the past 30 days. Walgreens Boots Alliance has a market cap of $78.2 billion and is part of the services sector and retail industry. The stock has a beta of 1.63 and a short float of 1.2% with 1.93 days to cover. Shares are up 8.3% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Walgreens Boots Alliance as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- WBA's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 6.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food & Staples Retailing industry average. The net income increased by 16.4% when compared to the same quarter one year prior, going from $695.00 million to $809.00 million.
- Net operating cash flow has significantly increased by 675.18% to $1,031.00 million when compared to the same quarter last year. In addition, WALGREENS BOOTS ALLIANCE INC has also vastly surpassed the industry average cash flow growth rate of 30.73%.
- WBA's debt-to-equity ratio of 0.73 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that WBA's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.66 is high and demonstrates strong liquidity.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full Walgreens Boots Alliance Ratings Report.
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