Stock of the Day

March 22, 2022

Kroger (KR)

$65.03
+$0.64 (+1.0%)
Market Cap: $46.59B

About Kroger

The Kroger Co. operates as a food and drug retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys. The company's marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys; and price impact warehouse stores provide grocery, and health and beauty care items, as well as meat, dairy, baked goods, and fresh produce items. It also manufactures and processes food products for sale in its supermarkets and online; and sells fuel through fuel centers. The Kroger Co. was founded in 1883 and is based in Cincinnati, Ohio.

Kroger Bull Case

Here are some ways that investors could benefit from investing in The Kroger Co.:

  • The Kroger Co. recently announced a stock buyback plan allowing for the repurchase of up to $7.50 billion in shares, indicating that the board believes the stock is undervalued. This can enhance shareholder value by reducing the number of shares outstanding.
  • The company reported earnings per share (EPS) of $0.98 for the latest quarter, surpassing the consensus estimate of $0.97, which reflects strong financial performance and effective management.
  • With a current stock price of $61.44, The Kroger Co. is positioned well within its 50-day moving average of $61.60, suggesting stability and potential for growth.
  • The Kroger Co. has a solid dividend yield of 1.96%, with a quarterly dividend of $0.32, which can provide a steady income stream for investors.
  • Institutional investors and hedge funds own 80.93% of the stock, indicating strong confidence from large investors in the company's future prospects.

Kroger Bear Case

Investors should be bearish about investing in The Kroger Co. for these reasons:

  • The company's quarterly revenue was down 1.0% year-over-year, which may indicate challenges in maintaining sales growth in a competitive market.
  • The net margin of 1.85% suggests that the company has limited profitability, which could impact its ability to reinvest in growth initiatives.
  • Insider selling has been notable, with a total of 195,448 shares sold by insiders over the last three months, which may raise concerns about the confidence of those closest to the company.
  • The return on equity (ROE) of 27.73% is strong, but it also indicates that the company is heavily reliant on debt to finance its operations, which can be risky in volatile markets.
  • Analysts expect The Kroger Co. to post an EPS of 4.44 for the current year, which may not be sufficient to drive significant stock price appreciation if market expectations are not met.

3 “Boring” Stocks to Consider Adding Now

Written By Sean Sechler on 3/19/2022

3 “Boring” Stocks to Consider Adding Now

These 3 Boring Stocks Can Be Beautiful

There’s absolutely nothing boring about making money, yet certain stocks that can offer steady gains tend to get overlooked by the majority of retail investors time and time again given their predictable businesses and slow-growth industries. While we are seeing some signs of life out of the technology and high valuation names after a massive selloff to start the year, less-volatile stocks are likely still going to be a good area to focus on going forward. These companies often offer nice dividend payments, are financially stable, and fit well in almost any portfolio given their reliability.

Many of these “boring” stocks have been outperforming thus far in 2022 and could continue trending higher over the next few months and beyond. It never hurts to look at companies that don’t receive a lot of fanfare among investors and financial media, as they can help you diversify your holdings and get into less crowded trades. That's why we’ve put together the following list of 3 “boring” stocks to consider adding now. Let's take a deeper look below.

Kroger (NYSE: KR)

The leading American grocery store chain has been incredibly impressive in March following the company’s Q4 earnings release, and the fact that the stock has held its post-earnings gap suggests higher prices could be ahead. Kroger operates roughly 2,700 retail supermarkets and multidepartment stores, which includes well-known brand names like Kroger, Ralphs, Food 4 Less, Fry’s, Fred Meyer, City Market, and Harris Teeter. It’s also worth noting that about 82% of Kroger stores have pharmacies, while roughly half sell fuel.

Since the beginning of the pandemic, Kroger has been prospering thanks to the strong demand for groceries. It’s a company that continues to capture market share from competitors thanks to low prices, private label brands, and strong analytics. The company recently beat FY 21 earnings estimates with diluted EPS of $3.68 on $137.9 billion in sales, which is impressive given that the company was dealing with supply chain issues, higher labor costs, and inflation. With a decent dividend yield, strong digital sales growth, and a low beta value of 0.42, Kroger is certainly worth a look given how volatile markets have been this year.

Deere & Co (NYSE: DE)

While farm, construction, and lawn equipment might not be as exciting as electric vehicles and cloud computing, that shouldn’t stop you from looking at Deere & Co as the stock attempts to break out from a year of consolidation. Deere manufactures and distributes equipment like tractors, loaders, combines, backhoe loaders, crawler dozers, excavators, and more, which are likely to be in very high demand going forward. Consider factors like increasing U.S. Federal infrastructure spending, rising crop prices, and residential building activity bouncing back from the impacts of the pandemic for great reasons to consider adding shares.

In February, Deere posted better-than-expected Q1 earnings with EPS of $2.92, beating consensus estimates by $0.64, and the company’s management raised its full-year outlook following the release. The dividend payout for Deere was also recently boosted by 17%, which is another sign of financial strength for investors to note. The bottom line here is that Deere is an ideal industrial stock to consider adding at this time, particularly with the stock breaking out to new all-time highs and crossing the $400 per share mark.

Eli Lilly and Co (NYSE: LLY)

Biopharmaceutical stocks can be very exciting during their early growth stages but tend to provide more slow and steady gains after they have been around for a few decades. That’s the case with Eli Lilly and Co, a major drug firm that focuses on developing and manufacturing therapies to treat pain, diabetes, cancer, and neurodegenerative diseases. With top products like cancer drugs Alimta and Verezenio, diabetes drugs Jardiance and Trulicy, and immunology drugs Taltz and Olumiant, investors can count on Eli Lilly to generate stable cash flows that support the stock's 1.37% dividend yield.

There’s also a lot to like about this company’s pipeline of new drugs, including candidates with blockbuster potential like immunology drug mirikizumab and Alzheimer’s drug donanemab. Eli Lilly recently posted decent Q4 results including adjusted EPS growth of 8% on revenue growth of 8% to $8 billion, and it’s clear that investors were impressed by the report given how the stock has rallied since the release. Eli Lilly shares are hitting new all-time highs and could be a very strong name to consider adding on dips going forward.

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