When it comes to many of the names in the consumer goods sector, one of the first things I look for is a company’s ability to demonstrate improved sales growth on a month-over-month basis. With that said, I wanted to take a brief look at the recent sales growth at Walgreen Co. (WAG) and also note a number of reasons behind my bullish stance on the company’s stock.

Company Overview

Headquartered in Deerfield, Illinois, Darden Restaurants, Inc. Walgreen Co., together with its subsidiaries, operates a network of drugstores in the United States. It provides consumer goods and services, pharmacy, and health and wellness services through drugstores, as well as through mail, and by telephone and online. The company sells prescription and non-prescription drugs; and general merchandise, including household products, convenience and fresh foods, personal care, beauty care, photofinishing, and candy products, as well as other health and wellness solutions.

Performance & Trend Behavior

As of Thursday's close, shares of WAG, which have risen just over 5% on a year-to-date basis, possess a market cap of $57.16 billion, a P/E ratio of 20.33, and a dividend yield of 2.11% ($1.26). Based on their closing price of $59.76/share, shares of WAG are trading 3.35% below their 20-day simple moving average, 5.49% below their 50-day simple moving average, and 8.65% below their 200-day simple moving average.

Based on their recent trends these numbers indicate both a short and a long term downtrend for the stock, which generally translates into a selling mode for most near-term traders and many long-term investors. With that said, I strongly believe we could see its trend behavior  improve on the heels of its very strong September sales growth.

A Brief Look at Walgreen’s September Sales Growth

On Friday, October 3, Walgreen released its sales growth for September. Included in that release were a number of strong sales related numbers, that included an increase in Front-End Sales (+2.2%), an increase in the average basket size per customer (+4.4%), an increase in comparable-store prescriptions (+6.6%), and lastly an increase in totals (+9.4%).

As a result of Friday's announcement, the company also noted that its same-store sales for the period rose 7.9%. If these numbers remain strong throughout the remainder of the year I think there's a chance we could see both its FQ1 earnings easily surpass the $0.76 per share that a number of analysts are currently estimating and a share price of $64/share by the end of the year.

Strong 36-Month Dividend Behavior

Over the last three years we’ve seen Walgreen increase its annualized dividend from $0.90/share in August 2011 to its most recent annualized dividend of $1.352/share that was paid in August of this year. This behavior not only demonstrates an overall increase of $0.452/share or $0.157/share per year but also demonstrates a 3-year dividend growth rate of 50.22%. If Walgreen can demonstrate sustainable monthly sales performances over the next 6-12 months, then there's a very good chance we could at least one dividend increase in the next 12 months.

Conclusion

If Walgreen can successfully enhance its sales growth over the next few months, then I strongly believe that not only will its recent trend behavior reverse course and move in more of an upward direction, but its full year earnings for both 2015 (in which analysts are calling for the company to earn $3.60/share on revenue of $100.15 billion) and 2016 (in which analysts are calling for the company to earn $4.42/share on revenue of $126.29 billion) should have no problem surpassing analysts’ expectations.