WBA - Walgreens Boots Alliance Stock Hits 27-Year Lows. Has It Become a Steal of a Deal?
2024-07-10 06:23:00 ET
Buying a stock on weakness can be a dangerous idea. Imagine a stock that you think may be a decent buy falls to a new 52-week low. Then a few weeks later, it hits a new low. Then another. And after a while of this tailspin, it's at a multiyear low. That's what many investors have been experiencing with Walgreens Boots Alliance (NASDAQ: WBA) .
Shares of the pharmacy retailer are not just near their 52-week lows but they recently even hit 27-year lows. This kind of an extreme sell-off suggests that there are serious problems under the hood that make the stock too risky of an option for many investors to consider. Let's take a look at just how risky Walgreens is, and whether it's a good contrarian buy right now, or if it is nothing more than a value trap at this point.
Walgreens has a lot of fires to put out. The business isn't generating much growth, it's facing a lot of competition from Walmart and Amazon , and it probably doesn't help that rival Rite Aid filed for bankruptcy last year. But if Walgreens improves its prospects for long-term profit growth, that can take care of what I think is its biggest issue. That's because if the company isn't generating strong margins, it won't be able to compete on price, it'll likely burn through cash, and it won't have nearly as many resources at its disposal to invest in its future growth.
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Walgreens Boots Alliance Stock Hits 27-Year Lows. Has It Become a Steal of a Deal?