Diamonds and Dogs

6/20/18

Walgreens (WBA) is entering the Dow Jones Industrial Average. In a stunning move, the powers that be will remove GE from the Dow and replace it with Walgreens. The leading operator of U.S. retail drugstores is up 5%, but still down 18% from its 52 week high set earlier this year. Walgreen's stock is not far from a 52 week low due to concerns of new regulations from the Trump administration and concerns Amazon will eventually get into their business. But with the stock only trading for 11 times earnings, the news they are entering the Dow next week should get the stock an added boost.

Starbucks (SBUX) cooling off. The coffee maker is down 9% to a 52 week low after lowering same store sales growth, lowering 2018 guidance and announcing store closings in the US. Add in a racial discrimination case and it's not too hard to figure out why Starbucks is performing poorly. The good news is they will continue to expand overseas and will return approximately $25 billion in cash to shareholders in the form of share buybacks and dividends through 2020.