Will Buyers Kick In for Walgreens-Boots Alliance?

Ed Ponsi

I'd like to introduce guest contributor Ron Lembo to Ponsi Charts. Ron is the manger of Sonoran Vista Group, LLC in Scottsdale, AZ. 

Investors and traders continue to run from Walgreens Boots Alliance (symbol WBA). The retail pharmacy stock is well off this year’s highs, falling nearly 33%. and is nowhere near the $85 range that was set in December of 2018. 

On July 9th, Walgreens Boots Alliance reported third quarter earnings, and the results were disappointing. Analysts were expecting $1.10 per share, but the company only earned .83 cents per share. 

Despite this poor performance, the old adage of buy low and sell high remains true. After a brutal reversal in high-flying stocks on the afternoon of July 13th, it's possible that we may be entering a period of sector rotation, as mentioned here.  

This means underperforming stocks like WBA might be about to come back into favor, at the expense of highly speculative names that have recently dominated the headlines. If so, at what price will buying pressure kick in for Walgreens Boots? Let's go to the charts to find out. 

To get the full impact of WBA's price action, we'll view the stock's monthly chart. Walgreen's Boots Alliance is approaching an area where buyers should find the stock attractive, near $34. If the price drops below $31, traders should kick it to the curb and try again if the stock approaches $23. 

WBA

In addition to last week's earnings, there are other negatives surrounding Walgreens Boots Alliance. The stock is down nearly 33% year to date, and yet it's saddled with a trailing price/earnings ratio of 47. 

The lack of participation by Walgreen Boots Alliance in the market's recent rally reveals a stock that's been forgotten by Wall Street. However, the under-performance of WBA and competitors like CVS, could soon lead to a reversal. 

You can reach Ron Lembo at Rlembo65@gmail.com