Why You Should Buy Walgreens Stock Now
Walgreens Boots Alliance (WBA) is one of the largest pharmacy retailers in the world, with over 21,000 stores in 11 countries. The company operates under the Walgreens, Boots, and Alliance Healthcare brands, offering a range of products and services for health and wellness. Walgreens also has a strong online presence, with over 100 million active members in its loyalty program.
Walgreens stock has been under pressure lately, due to the impact of the COVID-19 pandemic on its sales and margins. The company reported a 7.6% decline in revenue and a 22.3% drop in earnings per share for the fiscal year 2022. However, there are several reasons why investors should consider buying Walgreens stock now, as the company is poised for a turnaround in 2023 and beyond.
Strong Growth Potential
One of the main reasons to buy Walgreens stock is its strong growth potential, driven by several strategic initiatives and partnerships. The company is investing in digital transformation, expanding its e-commerce capabilities, and enhancing its omnichannel experience. Walgreens is also leveraging its vast network of stores and pharmacies to offer convenient and accessible health care services, such as COVID-19 testing and vaccination, telehealth, chronic care management, and specialty pharmacy.
Additionally, Walgreens has formed several alliances with leading companies in various sectors, such as VillageMD, AmerisourceBergen, Microsoft, and Uber. These partnerships aim to improve Walgreens’ operational efficiency, customer loyalty, innovation, and market reach. For example, Walgreens and VillageMD plan to open up to 700 primary care clinics at Walgreens locations over the next five years, creating a unique integrated care model that can attract more customers and generate higher revenue.
Another reason to buy Walgreens stock is its attractive valuation. The stock is currently trading at a forward price-to-earnings ratio of 9.4, which is significantly lower than the industry average of 16.8 and the S&P 500 average of 22.5. This implies that Walgreens stock is undervalued relative to its peers and the market, and has room for upside potential.
Moreover, Walgreens stock offers a generous dividend yield of 5.5%, which is well above the industry average of 1.9% and the S&P 500 average of 1.4%. The company has a long history of paying and increasing its dividend, with 46 consecutive years of dividend growth. This makes Walgreens stock an attractive option for income-seeking investors who want to receive steady and growing cash flows.
Risks to Consider
Of course, buying Walgreens stock also involves some risks that investors should be aware of. The company faces intense competition from other pharmacy retailers, such as CVS Health (CVS), as well as online players, such as Amazon (AMZN), which recently launched its own online pharmacy service. Walgreens also faces regulatory uncertainty, especially regarding drug pricing and reimbursement policies in the U.S. and abroad.
Furthermore, Walgreens’ recovery from the pandemic may take longer than expected, depending on the pace of vaccination rollout, consumer behavior, and economic conditions. The company may also face challenges in integrating its various acquisitions and partnerships, and achieving its expected synergies and cost savings.
The Bottom Line
Walgreens Boots Alliance is a global leader in pharmacy retailing, with a diversified portfolio of products and services for health and wellness. The company has been struggling with the impact of the COVID-19 pandemic on its business performance but is taking steps to improve its growth prospects and profitability. Walgreens stock offers a compelling combination of value and income for investors who are looking for a bargain in the health care sector.