Why Walgreens Boots Alliance stock is important today


What happened

Actions of Alliance of Walgreens boots (NASDAQ: WBA) are up nearly 8% as of 2:41 p.m. EDT today, having held onto most of their earlier gains as other retail-focused stocks moved from higher to lower in post-trading. -midday.

Today’s big leap comes from news that the US Senate has passed a massive $ 2 trillion economic stimulus package, with the bill now headed to the House, where it is expected to gain swift approval. before heading to the White House for a signature. The bill includes significant aid for individuals, including direct payments and an extension of unemployment benefits, as well as money to help businesses facing the large financial implications. parts of the economy being essentially closed to business during the coronavirus pandemic.

Image source: Getty Images.

So what

Other retail stocks gave up on their earlier gains and even fell into negative territory, probably because people are starting to remember that the near-term outlook for many consumer discretionary retailers remains very bleak. Much of the $ 2 trillion in stimulus is earmarked for individuals through extended unemployment benefits and direct cash payments. The rest will be used to provide a lifeline for struggling businesses, not to improve their bottom line

Walgreens, on the other hand, should prove to be a critically important retailer for the long haul. Access to medicines is an obvious need that will keep its pharmacies open, but the company also sells many basic products that are used daily. Walgreens is also one of the places that provide COVID-19 testing spaces, its role in anticipating this pandemic is therefore increasingly important.

Now what

Shares of Walgreens Boots Alliance are still down around 14% since the market began to fall seriously on February 20, and its trading results are likely to remain, if not strong, much larger than many other retailers. over the next few months. And that should also help support the course of its action.

But that’s no promise that he won’t fall as sometimes, and potentially even further than he did at his lowest point in recent weeks. Over the next few weeks, more economic data will be released, and as we see all the effects of COVID-19 on the economy, buyers today could turn into sellers.

What Should Investors Do? For starters, remember that stock market crashes have historically been great times to buy, as long as you are ready and able to hold for years. There is a good chance that today’s prices represent good value for investors who resist the downside and eventual rally.

But that said, it’s probably not the best investment in its industry. If you’re looking at Walgreens right now, a bigger, more diverse competitor CVS Health (NYSE: CVS) evolves more quickly to adapt to changes in the healthcare sector, and seems to have better prospects.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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