We witnessed a rare occurrence this week.
It wasn’t the spotting of Haley’s Comet, a double rainbow, or a four-leafed clover…
It was the toppling of a giant.
The funny thing about giants is the fact that they leave a gaping hole whenever they leave the world – and this giant is no different.
This giant is leaving a gaping hole in something that is very important to Wall Street – THE index that everybody pays attention to (for now).
The good news? There’s another giant poised to take its place…
But you’ll never believe who and why…
It’s scary to think that for the first time in more than a century, one of the founding members of the Dow Jones Industrial Average will lose its place at the table and be replaced by another.
A perennial producer of electronics and technology since the company was first started by a true American innovator, Thomas Edison, General Electric (GE) will be delisted from the Dow Jones Industrial Average while Walgreens (WBA) gets a call up from the NASDAQ to take its place.
General Electric went public in the 19th Century – and was one of the original 12 companies that made up the Dow Jones Industrial Average. It’s been continuously listed on the Dow since 1907 – and this marks the first time in almost 110 years that GE won’t be a part of the DJIA.
This is something that rarely happens on Wall Street – happening once every 3 years – but rarely do we see a giant the size of GE get toppled.
GE is an American Staple…
Look around your home, I’d bet dollars to donuts that you may have something the company has produced – maybe a lamp, stove, refrigerator, or light bulb – so to say that GE has had a lasting reach would be something of an understatement.
But…
That was then – THIS is now.
Then: when GE first went public way back in 1892, its stock price was $108 per share. That would be the same as a company IPO-ing at roughly $3000 per share today.
Now: shares in GE are hovering at just around $13 a share.
The stock has taken a nosedive over the past few years and is down approximately 55% in the past 12 months…
This decline more or less forced the DJIA’s hand in making the announcement that they would no longer be a part of the club.
Now, in the world of business, emotion isn’t something that should or often does come into play – it’s strictly numbers…
However, something tells me that this decision was not made lightly.
But what do you expect? The company hasn’t been producing the numbers it used to…
Of course, it may not help that some of their biggest vendors like Kmart, Sears (SHLD), JC Penny (JCP), and others are closing their doors faster than you can say, “Thanks, Amazon.”
But business is no different than life…
In both cases you need to adapt to survive – and unfortunately, GE hasn’t adapted fast enough.
However, their misfortune is Walgreens’ gain…
Walgreens has come into its own over the last century. Having stores in all 50 states and 25 other countries – Walgreens has really made a push over the past 30 years to make its brand synonymous with medication.
In fact, Walgreens has even broadened its revenue streams to include pharmaceutical and neutriaceutical manufacturing as well as dabbling in healthcare as well.
Walgreens’ Chief Digital Marketing Officer, Deepik Pandey, attributes Walgreens continued success to its commitment to the digital facet of the business.
“Consumers no longer shop in an ‘online’ or ‘offline’ world – they shop in a ‘non-line’ world,” Pandey said recently, and something that Walgreens keeps striving to do.
With its stock price hovering around $67 and a market cap of around $67 billion, Walgreens is looking like a fine addition to the DJIA.
The question remains: Is it strong enough to last?
Well, seeing many of the stocks in the DJIA are worth much more than $100 billion – and Walgreens is hovering under $70 billion – it may have a tall order to keep up with their new friends.
It doesn’t mean it can’t do it, it just means that its got some ground to make up.
And it could mean that right now may be the best time to jump on it before share prices go through the roof…
Because with the power of the rest of the DJIA behind them – it may be less of an “if” question and more of a “when.”
Do yourself a favor…
Do a little research on the company if you haven’t already.
It may fit into your stock portfolio – or it may not…
But it may be too good of an opportunity to pass up.
Either way, if you’re ever looking for help to figure out which stocks are on their way up – please consider giving GorillaTrades a try. Our track record of winning picks speaks for itself…
And if you join now – you’ll be among the first to get our next recommendation.
If not, we’re just happy to inform you of some of the goings on in the stock world and we’ll see you next week!
“I always want to take on the giants.” – Christen Press
