Walgreens and its investors won't look back on the stock's 2019 performance with much fondness. The stock is down nearly 15% this year, but there are reasons to believe a turnaround is on the horizon.
The stock has climbed nearly 12% since July, and its dividend yield of a little more than 3% means that things haven't been all bad for investors in the back half of the year. Plus, Carter Worth, Cornerstone Macro's head of technical analysis, says the stock is about to get a lot more attractive.
"There's your dog — Walgreens down 14% versus the Dow up 22%, and my thinking is that Walgreens is going to do something, in terms of catching up," Worth said Friday on "Options Action."
"What we know is that they were both sort of doing well, and then all things went sour for Walgreens Boots," said Worth.
The company warned back in March that certain headwinds may prevent it from reaching its lofty 7%-12% earnings growth goals for the year, which sent the stock tumbling. Then, Walgreens plunged more than 12% after a rough earnings report back in April.
But the technicals are pointing to a breakout, says Worth.
"A textbook rounding bottom," Worth called this setup. "You could also call it a head-and-shoulders bottom of sorts, meaning any way you cut this — and it's this dip back that should give you the pop — it's all setting up quite well. This is the dog of the Dow pick for me."
Walgreens was trading slightly higher on Monday.