February 21, 2024
I’m pleased that Amazon (AMZN) is now a component of the Dow 30, replacing Walgreens Boots Alliance (WBA). Amazon is a fundamentally strong growth company that represents the consumer market.
On a fundamental basis, Amazon will be included in most Maverick portfolios. Walgreen Boots Alliance was the Ugly in the Good, the Bad, and the Ugly of the Dow 30.
As you can see from the many Maverick reports I published here, and in the Cracking the Maverick Code book, I have anticipated this announcement for many months. Moreover, I called the stock uninvestable and always gave it a short-term and long-term AVOID recommendation. What irks me today is that Wall Street analysts supported this company and helped pump the stock in December as friends and family dumped it as the price lifted into the end of the year.
On page 26 of The Maverick Investor’s Handbook I explained why investors do not buy ETFs.
I strongly urge you to avoid exchange-traded funds, which Wall Street touts as the ultimate risk management solution. ETFs deprive you of any ability to do fundamental research.
With an ETF, you are simply trading a price. It’s like saying you are going to buy a car, not that you are buying a Tesla Model X or a BMW X6 – just a car. But investing in individual company securities provides clarity, akin to investing in your house or car, something you know in detail meets your needs.
A rather colorful analogy that an associate finds amusing is that buying an ETF is like ordering a hamburger with 10-20% fecal matter. Why subject yourself to something unpalatable?
Walgreens Boots Alliance is a prime example of why the Dow 30 ETF (DIA) is not of interest to investors.
WBA Maverick Reports in 4Q2023
December 24, 2023: $26.22
WalgreensBoots Business Description:
Walgreens Boots Alliance, Inc. is the world’s premier drug distributor, anchored by its network of drugstores in North America and Europe. As of 8/31/22, it operated 13,343 stores across the globe, including 8,889 locations in 50 states, Puerto Rico, and the US Virgin Islands. In 2022, pharmacy contributed 74% of sales; Other general merchandise, 26%. Stores average $9.9 million in annual sales. Has approximately 325,000 employees. Acquired 2,186 Rite Aid stores in September 2017. Officers and directors own 17.5% of the stock.
- Short-term stock buy/sell recommendation: 20231215: AVOID, BUT NOTE W BEARISH SIGNAL REVERSAL DEC 11
- Long-term stock buy/sell recommendation: AVOID
- Summary of beliefs and opinions
- An almost 8% dividend yield does not compensate for diminished operating and financial outlook and a negative 10-year average annual Total Return of -6.7% (though Dec. 6).
- Rapidly declining fundamentals (revenue, cash flow, earnings, and dividend growth) reflect poor and rapidly changing management.
- There are potential employee strikes on the near horizon.
- Despite the turnaround potential, there are too many pressing issues to consider Walgreens Boots Alliance a suitable investment for Mavericks.
- The 2024 earnings are unpredictable.
- The stock price has fallen substantially in 2H2023.
- Analysts have turned distinctly negative on the company.
- The company is a candidate for removal from the Dow 30 index.
WBA Consideration for Maverick Portfolio: WBA is not appropriate for any Maverick portfolio because the finances and operations are too unpredictable.
WBA Market Guidance: NOTE FREQUENT CHANGES
- Analyst Ratings: MarketBeat= HOLD TipRanks= HOLD.
- Consensus: 9 Wall Street analysts have offered 12-month price targets in the last 3 months. There are 2 Buy, 6 Hold, and 1 Sell.
Based on 9 Wall Street analysts offering 12-month price targets in the last 3 months, the average price target is $25.88, with a high forecast of $37 and a low forecast of $28. The average price target represents a -1.3% change from a recent price of $26.22.
- Dividend Yield: $0.48 per share paid quarterly to yield 7.56%.
Dividend growth for 15 years.
- Technical Sentiment (Technical Indicators and Moving Averages):
- Investing.com= Daily (STRONG BUY) Weekly (NEUTRAL)
- TipRanks= Daily (BUY) Weekly (NEUTRAL)
December 2, 2023: $20.79
Maverick Guidance:
- Short-term stock buy/sell recommendation: Avoid
- Long-term stock buy/sell recommendation: Avoid
- Summary of beliefs and opinions
- An approximate 8% dividend yield does not compensate for diminished operating and financial outlook and a negative 10-year average annual total return of -5.61% (though Oct. 13).
- Rapidly declining fundamentals (revenue, cash flow, earnings, and dividend growth) reflect poor management and rapidly changing management.
- There are potential employee strikes on the near horizon.
- Despite the turnaround potential, there are too many pressing issues to consider Walgreens Boots Alliance a suitable investment for Mavericks.
- The company is a candidate to be removed from the Dow 30 index.
Consideration for Maverick Portfolio: WBA is not appropriate in any Maverick portfolio.
October 14, 2023: $23.25
Maverick Guidance:
- Short-term stock buy/sell recommendation: Avoid
- Long-term stock buy/sell recommendation: Avoid
- Summary of beliefs and opinions
- An approximate 8% dividend yield does not compensate for diminished operating and financial outlook and a negative 10-year average annual total return of -5.61% (though Oct. 13). Rapidly declining fundamentals (revenue, cash flow, earnings, and dividend growth) reflect poor management and rapidly changing management. There are potential employee strikes on the near horizon. Despite the turnaround potential, there are too many pressing issues to consider Walgreens Boots Alliance a suitable investment for Mavericks.