Watch Out: Barbarians At The Gate For Walgreens Boots Alliance (WBA) - TheStreet

Trade-Ideas LLC identified

Walgreens Boots Alliance

(

WBA

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) 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 $338.5 million.
  • WBA has traded 2.4 million shares today.
  • WBA traded in a range 204.3% of the normal price range with a price range of $3.37.
  • WBA traded above its daily resistance level (quality: 69 days, meaning that the stock is crossing a resistance level set by the last 69 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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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 27. Currently there are 11 analysts that rate Walgreens Boots Alliance a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Walgreens Boots Alliance has been 4.1 million shares per day over the past 30 days. Walgreens Boots Alliance has a market cap of $98.3 billion and is part of the services sector and retail industry. The stock has a beta of 1.78 and a short float of 1.9% with 4.28 days to cover. Shares are up 17.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Walgreens Boots Alliance as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth 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 its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 48.4%. 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 significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 82.3% when compared to the same quarter one year prior, rising from $714.00 million to $1,302.00 million.
  • Net operating cash flow has increased to $1,822.00 million or 43.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.38%.
  • The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.
  • Powered by its strong earnings growth of 59.45% and other important driving factors, this stock has surged by 44.11% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.

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