We recently published a list of the 10 Worst Performing Stocks in S&P 500 in 2024. In this article, we are going to take a look at where Walgreens Boots Alliance, Inc. (NASDAQ:WBA) stands against other worst performing S&P 500 stocks in 2024.
Since 2023, the market has experienced extended winning streaks, reflecting the economy’s resilience. The most recent rally stretched six consecutive weeks but finally came to an end between October 21 and 25, marking the first week in six to close with a loss.
Nevertheless, the tech sector still closed with small gains as it was led by Tesla after its strong earnings. Despite that, now some experts in the market are trying to broaden their investments as they see uncertainty in the coming months, mainly due to the election and geopolitical reasons.
READ ALSO: 10 Best-Performing S&P 500 Stocks in the Last 3 Years and 10 Worst Performing Dow Stocks Year-to-Date.
A New Investment Approach Favoring Value Over Tech in Uncertain Times
James Cakmak, Chief Investment Officer at Clockwise Capital, detailed his recent shift from the tech-heavy Mag7 stocks into more diverse, value-focused sectors. Initially long on tech, Cakmak’s strategy changed due to heightened risks related to the election, geopolitical tensions, and economic cycles. While tech had seen significant growth, he felt it was essential to seek other opportunities for “alpha” as the market evolved.
Cakmak explained that Clockwise Capital has moved funds into undervalued sectors, such as automotive and metals, as well as smaller, less mainstream software companies.
Addressing inflation, Cakmak stressed the importance of keeping metals as a hedge. With inflation still showing signs of persistence and the Fed adjusting its rate cut expectations, he sees value in maintaining assets that traditionally perform well during inflationary periods, including gold.
Finally, he highlighted his commitment to semiconductors as a long-term investment theme, acknowledging their volatility but affirming their relevance in driving automation and productivity.
If we talk about other opportunities in the market, Goldman Sachs is bullish on undervalued quality growth stocks and cyclical value stocks as discussed by Christian Mueller-Glissmann from Goldman in a CNBC interview. We talked about it in our article: 12 Most Profitable Growth Stocks To Invest In. Here is an excerpt from it:
“Mueller-Glissmann highlighted two key reasons for not expecting a major market decline: inflation has significantly dropped, giving central banks more flexibility, and price momentum over the past 6-12 months suggests a strong macroeconomic backdrop. With the labor market improving, he sees no signs of an economic downturn.
His strategy focuses on quality growth stocks that are temporarily undervalued and cyclical value stocks that could recover as the market stabilizes.”
Our Methodology
For this article, we checked the performance of the S&P 500 stocks and picked out the 10 stocks with the highest share price decline, as of October 24. The stocks are listed in descending order of their share price performance. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? 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 Holders: 35
Year-to-Date Share Price Performance: -64.95%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a multinational holding company that operates major pharmacy chains such as Walgreens in the U.S. and Boots in the U.K. It was formed after Walgreens’ full acquisition of Alliance Boots, after initially purchasing a stake in 2012. The company has since grown to include retail, pharmaceutical manufacturing, and distribution operations in multiple countries. It is a significant player in the pharmacy sector, ranking among the largest U.S. corporations
Walgreens (NASDAQ:WBA) has seen better days but they haven’t occurred over the past few years. While it tops our list of worst-performing stocks of the current year, the company stock price also shows declines of nearly 83% over the last 5 years. Direct-to-consumer competition and operational challenges have significantly impacted the company’s performance over the last few years.
However, CEO Tim Wentworth joined the company in 2023 and is looking to make a turnaround, especially through cost-cutting measures. While the company’s losses widened in FY 2024, some positives gave the stock some breathing room. The company is up nearly 11% over the last 30 days, as of October 24.
In fiscal 2024, the company surpassed its cost-saving targets by achieving $1 billion in savings, reducing capital expenditures by $600 million, and generating $500 million from working capital initiatives. Additionally, it cut net debt by $1.9 billion and lease obligations by $1.2 billion.
Walgreens Boots’ (NASDAQ:WBA) strategy is now focused on being a retail pharmacy-led company, aiming to leverage consumer trust, convenience, and relevance. Plans include closing 1,200 underperforming stores over the next 3 years while investing in 6,000 profitable ones. 500 closures are expected in fiscal 2025, with a focus on underperforming or cash flow negative locations. It is also refreshing its product assortment, with a focus on health and wellness, especially women’s health.
The company aims to generate more free cash flow, reduce net debt, and monetize non-core assets like VillageMD. It is negotiating pharmacy reimbursement contracts to ensure fair pricing. The company will continue focusing on pharmacy margins, retail strategy, and debt reduction in fiscal 2025.
According to TD Cowen, Walgreens Boots (NASDAQ:WBA) adjusted EPS will keep dropping in fiscal year 2026, although the decline will be slower. It expects earnings to start growing again in fiscal year 2027. The firm maintains a Buy rating on the stock but reduced the price target for the stock by $2 to $14.
Overall, WBA ranks 1st on our list of worst performing stocks in the S&P 500. 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
