Equity Clock

Walgreen Company (NYSE:WAG) – Clock That Stock

The Stock

Walgreen Company (NYSE:WAG) continues to be under pressure after the tensions present with CVS Caremark Corp.   According to MarketWatch “CVS said it would cut Walgreens out of its pharmacy benefits plan network”.   CVS was cited as saying “it has no choice but to terminate Walgreens’ participation in its retail pharmacy networks effective 30 days from today.”   The stock is one of the bigger laggards in the market today, despite the market rally, producing losses reaching 5% in early day trading.   Since then it has turned positive on the session, buoyed by optimism in the market.

The Company is expected to report earnings on June 22, and event that usually spurs a 3% appreciation in the value of the stock over the following quarter.   The company has missed expectation in during June earnings over the past 2 years.

The stock currently holds an analyst “outperform” rating, yet institutions have been witnessed divesting of shares as of recent.   Fundamentals place the value of this equity at $37.65, or an astounding 27% above current levels.

Technicals indicate a strong level of support at around $28 with resistance reaching up to $40.   The stock has come off of its highs obtained in October of 2009, the speed of the depreciation has only advanced since the market decline that began at the end of April.   Over this time the stock has been heavily underperforming the market during the month of May.

Chart Courtesy of StockCharts.com

The Clock

The seasonal tendencies through the summer months are positive, albeit rocky.   Seasonal plays are best approached before and after the dip leading up to Q4 earnings in September, leaving June through August for returns reaching 5% on average and October through November for gains reaching 9%.

Walgreen Co. (WAG)     29.83

-0.78 (-2.55%)

Seasonality Analysis

Analysis has revealed that with a buy date of October 10 and a sell date of September 14, investors have benefited from a total return of 225.12% over the last 10 years.   This scenario has shown positive results in 7 of those periods.

Conversely, the best return over the maximum number of positive periods reveals a buy date of July 22 and a sell date of August 18, producing a total return over the same 10-year range of 72.87% with positive results in 10 of those periods.

The buy and hold return for the past 10 years was 34.83%.

Technical Analysis

Support 2

Support 1

Pivot Point

Resistance1

Resistance2

The Numbers

28.66

29.25

29.93

30.52

31.20

Most Recent Close:

29.83

Support/Resistance Analysis:

Broke Upr Support (1)

52-Week High:

40.69

MACD Analysis:

Negative/Decreasing

52-Week Low:

27.89

MACD vs. Signal:

Below/Widening

Fib. Retracement:

~ 23.6%

RSI Analysis:

Bearish

50-Day MA:

34.81

Stochastic (Fast) Analysis:

Increasingly Oversold

200-Day MA:

35.88

50 vs 200-Day MA Analysis:

50-day Below 200-Day MA

High Critical Level:

35.84

Year over Year Trend:

Weakly Declining

Low Critical Value:

30.88

Critical Level Analysis:

Broke Below Previous Trend

Average Monthly Gain:

-0.2%

MFI Analysis

Increasingly Oversold

Technical Rating:

4

Candlestick Analysis

Neutral/Indecision

On a scale of 1 to 10, the higher the rating, the more appealing the investment is to buy at current levels.

Situational Analysis

Past Year

Advancing Sessions %

Return %

10-Year Average

Advancing Sessions %

Return %

Jun 9 thru Jul 9

38.1

-5.6

Jun 9 thru Jul 9

52.2

-1

Best Return: 2% – Sell Jun 18

Best Return: 4.2% – Sell Jun 24

Jun 9 thru Sep 7

53.2

9.2

Jun 9 thru Sep 7

49.7

2.6

Best Return: 9.9% – Sell Sep 1

Best Return: 8.8% – Sell Aug 2

Jun 9 thru Dec 6

50.4

22.7

Jun 9 thru Dec 6

49.3

0.1

Best Return: 30.3% – Sell Oct 16

Best Return: 16.4% – Sell Sep 13

Following Earnings Releases in General – Last 12 Periods

Following Q1 Earnings Releases – Last 4 Periods

12-Period Average

Advancing Sessions %

Return %

4-Period Average

Advancing Sessions %

Return %

After 30 Days

43

-2.2

After 30 Days

56

0.9

Best Return: 3.9% – After 12 Days on Average

Best Return: 1.5% – After 22 Days on Average

After 60 Days

45.7

-3

After 60 Days

53.5

3.2

Best Return: 5.8% – After 26 Days on Average

Best Return: 6.6% – After 51 Days on Average

After 90 Days

45.9

-4

After 90 Days

53.6

3.4

Best Return: 6.7% – After 33 Days on Average

Best Return: 10% – After 66 Days on Average

Further Analysis

Sector:

Services

Industry:

Drug Stores

According to Thackray’s 2010 Investors Guide, the period of seasonal strength for the Consumer Staples Sector ranges from April 23rd through to October 27th.   This period is to the opposite of that of the Consumer Discretionary sector, which follows the strength of the broad equity markets from October to April.   Consumer Staples are a safe place to seek refuge when markets are volatile and market strength is not apparent.

Current Consensus Recommend:

Outperform

Recommendation 1-Month Ago:

Outperform

Recommendation 3-Months Ago:

Outperform

Disclaimer

Analysis, comments, calculations, and opinions offered in this report, available via EquityClock.com, are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed.

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Stocks mentioned in this post: WAG