Walgreens Newest Growth Plan Could Be Your Next Profit Play
July 9, 2020
Walgreens Boots Alliance Inc. (WBA) has been hit hard by the pandemic. While the company saw a massive boost at the beginning of the lockdown, as customers stockpiled for the unknown future, sales have been steadily declining. If the trend continues, it could completely wipe out the gains from the boosts earlier this year.
So, the company began looking at options to help support the business – and it seems like it has finally settled on the next step – doctors’ offices. In a recent announcement, the company revealed that it would be pairing with primary-care provider VillageMD to open 500 to 700 clinics across the country over the next five years.
Walgreens will be shelling out a cool $1 billion in equity and debt to VillageMD over the next three years in exchange for a 30% stake in this startup.
Walgreens and CVS Health Corp. have been in a race to become the “one-stop-shop” for treatment centers – specifically for patients with hard to manage chronic conditions. On top of their battle with CVS, a new competitor stepped into the ring a few years ago – Amazon.com.
This e-commerce space has drawn shoppers away from physical stores making the battle even tougher.
But with Walgreen’s latest move, it looks to have moved into first place. And it’s giving us the green light on a potential profit opportunity.
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Here it is…
I zoned in on the perfect setup to play this recent announcement by WBA using my proprietary trading system. And when I saw this signal come up on S.C.A.N. – I knew it would be an excellent opportunity for my Profit Pregame readers. And we’re going to use a trading strategy that will not only help us get in on this lucrative opportunity for cheaper but will help us control our risk as well.
It’s called a call spread. And when it comes to this type of trade, you buy one call option and sell another. This will help you cut your cost and allow you to get in on this trade for the perfect price.
Now, I like the WBA September 18, 2020 $50 and $52.50 calls. Especially if you can get this call spread for under $0.50. If you agree and see the profit potential as I do, all you have to do is tell your broker that you’d like to buy-to-open WBA September 18, 2020 $50 call and sell-to-open the WBA September 18, 2020 $52.50 call, creating a vertical debit spread. Try to get in this trade for less than $0.50 – and just like that, you’ve got skin in the game.
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