10 S&P 500 Stocks on Jim Cramer’s Radar

6. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)

Number of Hedge Fund Holders: 33

Cramer started the list of S&P 500’s losers in 2024 with Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and said:

“How about the S&P’s biggest losers? Wow, they are powerful, powerfully bad. Starting with Walgreens, down 64%. Here’s a company that needs a buyer or buyers, maybe some for the front of the store, decimated by Amazon, some for the back, which could be used as a dispensary for all sorts of drugs. CEO Tim Wentworth, he’s real good.

He’s closing money, losing stores, offering free one-hour delivery, has a series of incredible bargains on the homepage, check it out. But the balance sheet’s just not so hot and to truly turn around, well, Walgreens needs other pharmacies to go under so it can raise prices. Either that or it needs to break up different parts of the enterprise and sell them off. Down here, though I would not bet against Wentworth… you can’t if the stock’s just too low.”

Walgreens (NASDAQ:WBA), while a major player in the retail pharmacy industry, has faced considerable financial challenges in recent years, with its stock plummeting by over 80% in the past five years. This decline has largely been driven by heightened competition from tech-driven retailers like Walmart and Amazon.

The company is undergoing a turnaround plan that includes considering asset sales, implementing cost-cutting measures, and closing 1,200 underperforming stores. CEO Tim Wentworth pointed out that despite these difficulties, around 6,000 of its 8,000 stores are still profitable. Additionally, in early 2024, the company made a significant move by cutting its dividend yield by 48%, with a focus on better capital allocation.

After The Wall Street Journal reported in December that Walgreens (NASDAQ:WBA) is in discussions to be acquired by private equity firm Sycamore Partners, Morgan Stanley analyst Erin Wright stated that while the firm understands the context of a potential sale amid a challenging pharmacy environment, a buyout is difficult to envision due to Walgreens’ significant debt and low cash flow, which complicates the value creation potential. Wright has assigned an Underweight rating to the stock.