As 2018 approaches, investors will look for investing ideas that replace tax-lost sold stocks. Yet the very stocks that performed poorly may bounce back in the coming year. Investors may find value from stocks whose selling pressure on the markets ended. The catch is that its business must rebound.
Rite Aid (NYSE: RAD)
Rite Aid lost around three-quarters of its value in 2017. The company sold stores to Walgreens (NASDAQ: WBA). The remaining stores are still worth billions. The obvious risk for RAD stock is the crush debt levels, which Rite Aid may alleviate somewhat with the $4.4 billion from Rite Aid.
Walgreens will close 600 of its shares while taking in 1,932 stores from Rite Aid. This benefits both companies. Underperforming stores will no longer be a drag for the drugstore markets next year.
Walgreens’ stock is also recovering. Valued at just 19x earnings and 12x forward earnings, chances are good that the company will continue rebounding. Valeant Pharmaceuticals (NYSE: VRX) is another pick for the coming year. The generic drug giant has a multi-year distribution deal with Walgreens.
The two companies need each other to bring enhance value to customers. In giving better services and prices to its customers, sales will improve, ultimately giving shares for both companies a lift.
