Walgreen: Potential Upside Makes Risks Worthwhile

Today’s Research recommendation is Walgreen’s (WAG), which is trading at a low of $31. Let’s get straight to the numbers. Below I will list the Dow Theory interpretation of the price movement of prior periods (which is supposed to assist us with finding the final low in the price) and contrast that with the actual low for the stock.

From the bottom in July of 1994, WAG went from $4.22 to $33.94 in February of 1999. According to Dow’s Theory, the price of WAG was expected to fall from $33.94 to any of the following three levels:

• $24.04
• $14.12
• $4.21

WAG actually bottomed at $22.06 in March of 2000.

From the bottom in March of 2000, WAG went from $22.06 to $45.75 in October of 2000. Dow’s Theory says that the stock should fall to the following levels:

• $37.85
• $29.95
• $22.05

WAG actually stopped falling at $26.90 in February of 2003.

From the bottom in February of 2003, WAG went from $26.90 to $51.60 in S eptember 2006. Dow’s Theory says that the stock should fall to the following levels:

• $43.37
• $35.14
• $26.91

WAG is currently selling at around the $31 level.

Walgreen’s has shown from previous periods that the stock price tends to overshoot the second price level on the downside. The current price movement is no exception. With all the drama that we’re seeing in the stock market I’d assume that the price will go as far as the $26.91 level. However, even at the current price this stock is a bargain and would warrant taking the risk of holding with the potential for a 13% decline in the short run. Good luck on your research of this stock.

Comments

[mwfall:]

According to Dow’s Theory, the price of WAG was expected to fall from $33.94 to any of the following three levels:

$24.04
$14.12
$4.21

it's actually entertaining to read such useless babbling.

2008 Sep 27 01:31 AM

[PeteK:]

There are too many Walgreens around. Like the Starbucks
shops, too many within the same area. CVS & WAG seem
to have a race to build more stores everywhere.

2008 Sep 27 07:59 PM

[Danbert:]

WALGREENS will buck the trend because

THEY DO NOT CARE ABOUT EMPLOYEES OR CUSTOMER, all they care about is protecting $100K worth of cosmetics instead of helping someone in the photo lab

2008 Sep 28 09:11 AM

[dad of das ...:]

I've always told Das Frogger to forget the past. Your past mistakes are history. Focus on the future. But, he is a very emotional lad, and always hangs on to bad past experiences. I tell him, when you have a job to do, you must do it. But he's always been much of a slacker. He wants to do what he wants to do, and nothing more.
He's never been much help around the house to his mother and me. I hope one day he will get himself together and see life's big picture, and become a good boy.

2008 Oct 26 06:17 PM