KR: Underappreciated And Undervalued

I’ve long been a Kroger (KR) fan and shareholder and see no reason to stop now. In fact with inflation and weak economic growth squeezing consumers I believe that this is KR’s sweet spot. That’s because KR – the nation’s leading grocer – sells something people simply can’t live without: food. You can cut back or eliminate many discretionary purchases but you have to eat.

And yet KR continues to trade at only 12x current year EPS guidance. KR is also guiding full year comps to 4.0%-4.5% and pays a 2.12% dividend. It’s very hard for me to see how you can lose a lot of money investing in KR here and the upside should take care of itself. It’s not sexy like software as a service or an iPhone app but it’s a great business that consistently performs. I wouldn’t hesitate to pick up shares ahead of their 3Q22 earnings report this Thursday morning.

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