Walgreens Boots (WBA) has fallen in recent trading to a point that makes these shares especially attractive for 2019, asserts dividend reinvestment specialist Chuck Carlson, editor of the industry-leading DRIP Investor.
While international business is a bit on the sluggish side — hence the reason for the recent selloff — I like the company’s domestic business and the opportunities its drugstore and health-care-related businesses offer.
The company — a recent addition to the Dow Jones Industrial Average — has beaten consensus earnings estimates in each of the last seven quarters, and I think the earnings beats will continue in 2019.
It’s no secret that Amazon (AMZN) has been aggressively entering markets over the last few years, much to the chagrin of legacy players in those markets. One recent market the firm has spotlighted are healthcare. Amazon recently announced it is acquiring PillPack, which presorts medications and ships them to customers’ homes in 49 states.
While the “Amazon effect” will likely loom over these shares, I think it is a mistake to automatically dump stocks because Amazon is threatening to become a bigger player in their markets. Walgreens is a formidable competitor in its respective spaces, and I suspect the stock will mount comebacks over time.
We have seen such comebacks in legacy players in certain industries that Amazon has entered, including retail and grocery stores. Investors looking for value in quality blue chips should take advantage of the weakness in Walgreens buy these shares.
The stock trades at just 10 times 2019 consensus earnings estimate, so there is plenty of value to be had in the stock. And the dividend yield of 2.5% provides a nice kicker to total-return potential.
Be aware that Walgreens offers a direct-purchase plan whereby any investor may buy the initial shares directly from the company. I have been a long-time owner of Walgreens and see these shares outperforming the broad market in 2019.
