Dead Cat Bounce or Deep Value? Can You Guess April’s Mystery Stock?
[showmodule id=”58959″]
2021 has been a year of surprises, with many forgotten old stocks leading the market higher. This month’s mystery stock is major example of that trend.
It’s up 38 percent on the year, more than quadruple the gain the S&P 500. This firm is also the top-performing member of the Dow Jones Industrial Average — even though many people have never heard of it. Or at least, they don’t know the company in its current form.
April’s mystery stock traces its history to a British “chemist,” or pharmacy, founded 172 years ago. Its earliest operations as an herbal-remedy shop in Nottingham morphed into a national chain called “Boots the Chemist.” The company continued to grow in the 20th century and was soon one of the U.K.’s largest retailers. It was acquired by KKR in 2007.
The U.S. half of our mystery stock began on the South Side of Chicago in 1901. It took off in the 1920s when Prohibition drew customers to soda fountains. The company had grown into a national chain by the time founder Charles Walgreen died in 1939.
Walgreen’s quietly expanded over the following decades, spreading to the East Coast and Puerto Rico. It also bought the iconic New York City pharmacy Duane Reade in 2010. The big transaction came four years later when it purchased 45 percent of Alliance Boots. It acquired the rest of the firm in 2014 and assumed its current form as Walgreen Boots Alliance (WBA).
Walgreens Joins the Dow
Walgreen Boots Alliance (WBA) joined the Dow Jones Industrial Average in June 2018, replacing General Electric (GE).
By that time, WBA was one of biggest players in the U.S. pharmacy industry with over 9,000 locations. The company has continued to evolve since, and recently sold its Alliance Healthcare drug-distribution business to focus on retail-pharmacy and health-care operations. It also came under new leadership last month, when Rosalind Brewer became CEO.
WBA reached an all-time high of $97.30 in August 2015. It then rolled over with most other health-care stocks and trended lower for the next five years. Weak margins and a heavy debt load following several acquisitions contributed to the slide.
Things started to turn around in October when results and guidance surprised to the upside. The stock hit an eight-year low of $33.36 later in the month before turning higher. Another strong quarterly report followed on January 7.
In addition to the improved earnings, WBA benefited this year as investors embraced “value” stocks. It trades for roughly 10 times forward earnings — less than one-third the readings on prominent technology stocks like Apple (AAPL) and Microsoft (MSFT).
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial.
Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.
Money is flowing back into stocks as investors hope for a better inflation report this week. The S&P 500 rose 1.9 percent between Friday, May 3, and Friday, May 10. It was the third straight positive week. More than four-fifths of the index's members advanced,...
Oracle jumped to new highs almost two months ago. Now, after a pullback, the software giant may have found support. The first pattern on today’s chart is the gap higher on March 12 after earnings surprised to the upside. ORCL retraced the move and is starting to...
Most of the big earnings reports have now occurred, and so far they've done little to boost the market. Companies like Microsoft (MSFT), Meta Platforms (META), Netflix (NFLX), Caterpillar (CAT) and Intel (INTC) reported profits above Wall Street estimates. However...
Leaving TradeStation
You are leaving TradeStation.com for another company’s website. Click the button below to acknowledge that you understand that you are leaving TradeStation.com.
This event is hosted on YouCanTrade. The information for this event is being provided for informational and educational purposes only.
You are leaving TradeStation Securities and going to YouCanTrade. YouCanTrade is an online media publication service which provides investment educational content, ideas and demonstrations, and does not provide investment or trading advice, research or recommendations. YouCanTrade is not a licensed financial services company or investment adviser and does not offer brokerage services of any kind.
TradeStation Securities, Inc. provides support and training channels hosted on YouCanTrade, its affiliate. Other than these support and training channels, any services offered by YouCanTrade are not sponsored, endorsed, sold or promoted by TradeStation Securities and it makes no representation regarding any YouCanTrade goods or services.
To acknowledge you are leaving TradeStation Securities to go to YouCanTrade, please click
This website uses cookies to offer a better browsing experience and to collect usage information. By browsing this site with cookies enabled or by clicking on the "ACCEPT COOKIES" button you accept our Cookies Policy. To block, delete or manage cookies, please visit your browser settings. Restricting cookies will prevent you benefiting from some of the functionality of our website.ACCEPT COOKIES