Quick Takes: The Rise and Fall of Walgreens
- You can be wrong about the bigger picture on a stock.
- But there’s an approach that can help you profit on it anyway.
- It’s a win-win trade scenario.
At the start of the pandemic and business lockdowns, there was one company and stock that I knew would benefit. It was Walgreens (Nasdaq: WBA).
I was confident about it too.
On February 27, as the world began to unravel, I sent an alert out to my Pure Income subscribers to add exposure to the stock.
Not because it was a high-flying tech company, but because people were panicking and pouring into the company’s stores.
Concerned shoppers stocking up on masks, medicine and water used Walgreens as a convenient one-stop shop.
Added to the fact that it was able to stay open in every state — even putting COVID-19 virus testing in some parking lots — it was sure to see a rise in demand.
But, even with all those positive tail winds for the stock, investors didn’t care. It didn’t make up for all the issues going on with the company.
As investors adjusted their expectations for the stock, shares have declined in recent years. And that’s continued for the past few months.
Walgreens’ revenues are climbing. But what investors are watching is its earnings — the bottom-line results for the company. And earnings are falling rapidly.
That’s because the company is seeing higher costs thanks to the pandemic. With fewer non-COVID-19 hospital visits, it’s also losing prescription sales. And while U.S. locations are doing OK, the company is taking a hit over in the U.K.
This overall weakness for the company’s growth has impacted its stock.
Today, I run through Walgreens in my latest Quick Takes video to tell you if this is a stock you want to bank on going higher over the next few months … or one that is set to tank and go lower.
Click on the image below to watch it now:
I Was Wrong, but We Still Profited
Even though Walgreens has struggled and fallen 25% since I told my readers about the stock, Pure Income subscribers walked away with a quick 4.6% gain in just three months.
Even during the time we held our position — when the stock was down 10% — we still managed nearly a 5% gain from the most consistent strategy I have ever used.
We didn’t short the stock. Clearly, we didn’t buy a call option either. (Remember — call options lose money when a stock falls.)
Instead, I used an approach that helped us profit, even though I was wrong about the bigger picture on the stock.
I made a trade that gave us a win-win scenario — it would do well whether the stock went up or even fell a little.
I’m talking about selling put options.
This kind of trade has allowed us to collect consistent 5%-to-10% returns every single month.
And I want you to be as confident with options so that you can make these trades as well. It’s why I started my weekly newsletter at no charge — Weekly Options Corner.
Every Friday, I’m working to help every one of you master the art of trading options.
So you can understand how even when I may be wrong, I can still put on trades that generate profits.
It’s not rocket science … it’s just options.
Chad Shoop, CMT
Editor, Pure Income
P.S. When you have a winning trade like the one we talk about above, it’s easy to just take your gains and move on. But what if I told you that you could put those gains to use instead? I’m talking about my Profit Stacking strategy.
I identify seasonal trades in multiple sectors and show you how to “stack” your profits throughout the year. You could make 5% on a trade … or you could take that 5% and grow it even more in next month’s trade. And then it can grow even more the month after that. Click here to find out how.