We recently compiled a list of the 10 Oversold NASDAQ Stocks To Invest In Now. In this article, we are going to take a look at where Walgreens Boots Alliance, Inc. (NASDAQ:WBA) stands against the other oversold NASDAQ stocks.
The NASDAQ soared to an all-time high on October 7, getting a boost from tech and mega-cap stocks. In an interview with CNBC on October 26, Nick Colas, Co-Founder at DataTrek Research Nick shared his insights on the current market trends and the potential for the tech-heavy index to continue its upward momentum. Colas discussed the historical data on the index’s performance in the third year of a bull market, highlighting that in six out of ten instances, the index continued to rally, while in four instances, it did not.
Colas noted that the overall churn for the index in the third year of a bull market is 4.4%, which is not impressive, but attributed this to the four losing years of 1984, 1987, 1990, and 2011, which were marked by significant events such as the 1987 crash and the 1990 invasion of Iraq. However, when these numbers are excluded, the average return for the index in the third year of a bull market is 13.3%. Colas expressed his optimism that as long as there are no major catalytic events, the momentum is likely to continue, and the NASDAQ could see at least a 10% return, if not better.
Colas argued that the index’s performance has not been uniform, with other groups and small caps taking leadership occasionally, indicating a healthier market than in the 1990s, when tech stocks dominated. He also pointed out that while the NASDAQ is up 45% over the past 12 months, its three-year returns, including the 2022 bear market, are more modest, suggesting that the index still has room to run.
Colas acknowledged that valuations are high, but emphasized that valuations are notoriously bad at timing the market. He believes despite the high valuations, the NASDAQ’s momentum and the overall market trend could continue to drive the index higher.
The NASDAQ’s recent surge to an all-time high has sparked optimism about its future performance, with some experts predicting continued growth despite high valuations. While there are always uncertainties and potential risks, the current trend suggests that the index may have further room to run. With that in context, let’s take a look at the 10 oversold NASDAQ stocks to invest in now.
A businessman in a boardroom, monitoring the stock performance of the company.
Our Methodology
To compile our list of the 10 oversold NASDAQ stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest NASDAQ stocks that have fallen significantly on a YTD basis and have a forward P/E of less than 15, as of October 23. We then narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Investors: 35
Forward P/E Ratio as of October 23: 5.46
YTD Performance as of October 23: -62.73%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a global pharmacy and healthcare company with retail pharmacy chains in the U.S. and Europe. The company has been working to diversify its offerings, including expanding into healthcare services.
For the fiscal year that ended August 31, Walgreens Boots Alliance, Inc.’s (NASDAQ:WBA) sales grew by 6.2% to $147.7 billion. The U.S. Healthcare segment achieved an adjusted EBITDA increase of $442 million. The company exceeded its fiscal 2024 targets, including $1 billion in cost savings, a $600 million reduction in capital expenditures, and $500 million in working capital initiatives. Additionally, the company’s net debt was reduced by $1.9 billion, and lease obligations were lowered by $1.2 billion.
The company announced a footprint optimization program aimed at closing approximately 1,200 locations over the next three years, including around 500 closures in fiscal 2025. These actions are expected to be immediately accretive to adjusted EPS and free cash flow.
For fiscal 2025, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) anticipates adjusted EPS in the range of $1.40 to $1.80. While growth is expected in the U.S. Healthcare and International segments, this will be more than offset by a decline in the U.S. Retail Pharmacy, a higher adjusted effective tax rate, and reduced contributions from sale-leaseback transactions and Cencora earnings.
Overall WBA ranks 4th on our list of the oversold NASDAQ stocks to invest in now. While we acknowledge the potential of WBA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WBA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.