Buy Walgreens And Sell CVS: A Pair Trade Idea

Yves Sukhu
1.95K Followers

Summary

  • Walgreens Boots Alliance and CVS Health shares had a tendency in the past to move somewhat closely with each other (on a daily percentage basis).
  • More recently, Walgreens and CVS stocks show a divergence from each other.
  • I suggest WBA and CVS as a pair trade idea, buying WBA and selling CVS.
  • In particular, I offer 3 main arguments to support the notion of a near-term rally in WBA shares and a longer-term decline in CVS shares.
Young pharmacist checking the shelves with a digital tablet at the pharmacy

FG Trade/E+ via Getty Images

A Divergence

Walgreens (NASDAQ:WBA) and CVS (NYSE:CVS) obviously have overlapping, albeit not identical, businesses. In the graph below, we can see a certain correlation since 2018 in terms of the (percentage-based) movement of each stock; but, we can also see that correlation breaking down in

This article was written by

1.95K Followers
I have a background in enterprise software. From time to time, I stray from the technology sector to write about companies that I think are worthy long-term investments.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WBA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About CVS Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on CVS

Related Stocks

SymbolLast Price% Chg
CVS
--
WBA
--