So Walgreens might have its day in the sun soon. The stock is finally trending up. The technicals look good and volume is starting to increase on the daily. This is not a short term play. This is a 6 month steady dollar cost average. That being said, I would buy the April 2025 calls at 12.50.
Here is a more constructive analysis….
The US economy is not good and there will be no “soft landing.” We just saw Walmart knock the cover off the ball. Target saved their earnings by shutting down stores in California as well taking advantage of the quiet casual. Quiet casual is code for… I used to be rich, now I’m not so I’ll wear white label target clothes with a Gucci belt I haven’t had to pawn yet. Walmart picked up the target shopper and target picked up the rodeo drive shopper. What does this mean for Walgreens? It means they just picked up the Walmart shoppers. How do we know that? They just became eligible to accept snap. If they pick up just 10% of snap households at 30 bucks a month, that’s over 1.5bb in revenue.
Walgreens has refinanced debt with more expensive debt but that is a bullish sign. They believe 8% debt is better than selling equity. That means they expect the stock to go up at least 12% in the coming year. This is a long term play of at least 12 to 18 months. With a PE ratio at all time lows, this is heavy value and will do well in the economy we are heading into.
Here is a more constructive analysis….
The US economy is not good and there will be no “soft landing.” We just saw Walmart knock the cover off the ball. Target saved their earnings by shutting down stores in California as well taking advantage of the quiet casual. Quiet casual is code for… I used to be rich, now I’m not so I’ll wear white label target clothes with a Gucci belt I haven’t had to pawn yet. Walmart picked up the target shopper and target picked up the rodeo drive shopper. What does this mean for Walgreens? It means they just picked up the Walmart shoppers. How do we know that? They just became eligible to accept snap. If they pick up just 10% of snap households at 30 bucks a month, that’s over 1.5bb in revenue.
Walgreens has refinanced debt with more expensive debt but that is a bullish sign. They believe 8% debt is better than selling equity. That means they expect the stock to go up at least 12% in the coming year. This is a long term play of at least 12 to 18 months. With a PE ratio at all time lows, this is heavy value and will do well in the economy we are heading into.
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