S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
Critical asset just had biggest fall on record (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
Critical asset just had biggest fall on record (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
Critical asset just had biggest fall on record (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
Critical asset just had biggest fall on record (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case

Kroger’s is Your One-Stop Consumer Staples Stock

Kroger StockGrocery chain operator The Kroger Company NYSE: KR stock is trading up 4.5% in 2022 far outperforming tech stocks and the benchmark indices. The Company operates approximately 2,800 grocery store and pharmacies under two dozen banners in the 35 states and also sells fuel through over 1,600 centers. The grocery business is what’s been saving the big box stores like Target NYSE: TGT and Walmart NYSE: WMT and especially warehouse giant Costco NASDAQ: COST. High inflation has been curbing consumer discretionary spending in favor of consumer staples as indicated by Dollar General’s NYSE: DG earnings. While they don’t have many discretionary items, the pure play in consumer staples is Kroger’s. They specialize in the two most essential consumer items, groceries and pharmacy. It’s like owning Target without the clothing and electronics and CVS NYSE: CVS without the marked up to discount down prices. They also have a thriving private label business, Our Brands, which grants them higher margins and accelerating sales growth. Kroger’s also owns a ton of real estate. Its shares are trading at 11.5X forward earnings and sports at 2.17% dividend yield, ideal for value investors.

Steady Eddie Wins the Race

On Sept. 21, 2022, Kroger released its fiscal second-quarter 2022 results for the quarter ending July 2022. The Company reported a profit of $0.90 per share beating consensus analyst estimates for $0.83 per share by $0.07. Revenues rose 9.3% year-over-year (YoY) to $34.64 billion beating consensus analyst estimates for $34.44 billion. Identical sales excluding fuel grew 5.8%. Digital sales grew 8% and Our Brands identical sales rose 10.2%. The Company raised its dividend for the 16th straight quarter in addition to buying back $309 million in stock in the quarter.


Staples are More Than Stable

Kroger CEO Rodney McMullen commented, "Kroger delivered strong second-quarter results propelled by our Leading with Fresh and Accelerating with Digital strategy. We are incredibly thankful for our dedicated associates who continue to deliver a full, fresh and friendly customer experience. Our consistent performance underscores the resiliency and flexibility of our business model, which enables Kroger to thrive in many different operating environments. We are applying technology and innovation to improve freshness, grow Our Brands, and create a seamless shopping experience so our customers can get what they want, when and how they want it, with zero compromise on quality, selection and affordability.”

Conservative Guidance

Kroger’s issued conservative guidance on the safe side. The Company issued its fiscal full-year 2022 EPS to range between $3.90 to $4.05 versus $3.96 consensus analyst estimates. Kroger’s expects full-year identical sales to rise 4% to 4.5%.

Private Label is the Growth Driver

Kroger’s has evolved it’s private label brands beyond being just cheaper knockoffs. Customers are actually preferring their culinary food and natural/organic brands over national brand names. It’s private label brands saw 10.2% YoY growth at nearly double the pace of general identical grocery sales of 5.8%. They sell over 10,000 products under its private label brands including Simple Truth, Private Selection, BLOOM HAUS, Bakery Fresh Goodness, and Home Chef. They launched another private label brand Smart Way in the quarter. It’s Our Brands private label products wont 12 Editor’s Picks awards for Best New Products in 2022.

Kroger’s is Your One-Stop Consumer Staples Stock

Attractive Pullback Levels

Using the rifle charts on weekly and daily charts can provide a near-term perspective of the playing field for KR stock. The weekly rifle chart peaked on its earnings spike near the $52.22 Fibonacci (fib) level. Shares collapsed quickly through the weekly 5-period moving average (MA) at $49.11, 15-period MA at $48.15, and the 50-period MA at $48.38. The rising weekly stochastic is starting to stall at the 50-band. The stock plunge fell through the weekly market structure low (MSL) buy trigger at $47.67. The daily rifle chart is attempting a breakdown as shares plummeted through the daily 200-period MA at $49.73, 5-period MA at $48.80, and the 15-period MA at $48.79. Shares fell through the 50-period MA at $47.92 towards the daily lower Bollinger Bands (BBs) at $46.15. Attractive pullback levels sit at $46.69, $45.69 fib, $44.31 fib, $42.93 fib, $40.97 fib, $40.18 fib, and the $39.80 fib level.

→ This is the #1 Stock to Buy for the AI Tidal Wave (From Chaikin Analytics) (Ad)

Should you invest $1,000 in Kroger right now?

Before you consider Kroger, you'll want to hear this.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Kroger (KR)
3.0395 of 5 stars
$49.16-0.9%2.36%19.13Hold$53.00
Walmart (WMT)
4.5434 of 5 stars
$58.76+0.3%1.29%30.71Moderate Buy$61.03
Target (TGT)
4.692 of 5 stars
$155.29+1.5%2.83%19.81Moderate Buy$152.83
Costco Wholesale (COST)
4.2712 of 5 stars
$749.44+0.7%0.54%51.09Moderate Buy$659.96
CVS Health (CVS)
4.9704 of 5 stars
$73.84-0.7%3.60%11.43Moderate Buy$90.00
Dollar General (DG)
4.1019 of 5 stars
$149.26+2.7%1.58%17.18Hold$146.32
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Jea Yu

About Jea Yu

  • JeaYu21@gmail.com

Contributing Author

Trading Strategies

Experience

Jea Yu has been a contributing writer for MarketBeat since 2018.

Areas of Expertise

Equities, options, ETFs and futures; fundamental, qualitative, quantitative and technical analysis and pattern identification; active and swing trading; trading systems and methodology development

Education

Bachelor of Arts, University of Maryland, College Park

Past Experience

U.S. equity markets trader, writer and analyst for over 25 years. Published four books by publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. Speaker at various expos and seminars and has been quoted and featured in USA Today, The Wall Street Journal, Traders Magazine, The Financial Times and various trade publications, including Stocks & Commodities, Active Trader and Online Investor.


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