History Says This is the Worst Dow Stock to Own in May

A shift in the options pits could pressure WBA even lower

Digital Content Manager
Apr 28, 2022 at 3:38 PM
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The S&P 500 Index (SPX) is headed towards an unseasonably bearish April. With plenty of reason to believe more choppiness lies ahead, now could be a good time for traders to reassess their investments. One stock in particular they may want to avoid in May is Walgreens Boots Alliance Inc (NASDAQ:WBA). Below, we will take a closer look at the blue chip stock's performance, and why it could be a good idea to ditch it over the next few weeks. 
 

On a list compiled by Schaeffer's Senior Quantitative Analyst Rocky White of the worst SPX stocks to own in May over the last decade, Walgreens Boots Alliance stock stands as the worst Dow member, and is also among the top three names with the most severe losses. In fact, WBA averaged a 3.2% loss for the month, notching a negative settlement in eight out of those 10 years. 

 

Worst of MaY

 
The security has had an extremely volatile 2022 thus far, culminating in its 14.7% year-to-date deficit. Last seen up 0.7% to trade at $44.53, the shares appear to be testing a familiar floor at the $44 level. However, long-term overhead pressure remains at its 60-day moving average, which capped Walgreens Boots Alliance stock's rally to the $47 region last week.

WBA 60 Day

An unwinding of optimism in the options pits could pressure the security even lower. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WBA's 50-day call/put volume ratio of  3.71 stands higher than 85% of readings from the last 12 months. This means long calls have been getting picked up at a much quicker-than-usual pace.

The brokerage bunch remains on the fence when it comes to Walgreens Boos Alliance stock. Of the 11 firms in coverage, nine still carry a "hold" rating, leaving plenty of room for analysts to take a more bearish stance going forward, possibly in the form of downgrades.

 

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