Should You Invest in Kroger?

OVERVIEW

The Kroger Company is a company based in the United States. The company operates a chain of retail stores and an e-commerce platform in the United States. The company operates over 2,700 stores across 35 states. It sells groceries, food products, personal care products, and other products. The company was founded in 1883.

Why You Should?

  1. Kroger is a great reopening play in an investor’s portfolio. The company continues to see strength in its large grocery business as people go back outdoors and eat food together. In addition to this, the company will see fewer supply chain issues and more workers to staff its stores. This will also benefit investors in the company.
  2. The COVID-19 pandemic has benefited the company as well. As people stayed indoors, they purchased more food to eat indoors instead of going out to eat at restaurants and other venues. Stockpiling also benefited the company early on in the pandemic. This has also benefited investors in the company.
  3. Kroger is a safe investment option in an investor’s portfolio due to the essential nature of the products that it sells. Regardless of the economic times, people will continue to purchase groceries, food, and other personal care and pharmaceutical products. This will help the company go through tough economic times and will also benefit investors in the company.
  4. Kroger makes the bulk of its money by selling food and groceries. This is something that Amazon is still not great at doing (yet) as they are still unable to serve many communities at a competitive price (due to high costs). Because Kroger is at the center of many communities across the United States, the company has seen a fairly muted impact from Amazon at the moment.
  5. Kroger can utilize its 2,700 stores to implement an effective e-commerce platform (like using stores as a distribution center for a specific area around the store and order online pick-up in-store models). Kroger can really beat Amazon and other companies in the grocery sector, something that will benefit the company and its investors in the long term.
  6. Investing legend, Warren Buffett, had continued to increase his stake in Kroger as he sees the company as a great value investment. A strong and consistent dividend, a safe investment option, as well as a compelling stable and growth play. Because people and analysts like Buffett are hopeful about the company, I think that Kroger is a good investment option.

Why You Should Not?

  1. Kroger faces tough competition in the grocery and retail industry. Some of these competitors include Walmart, Target, Amazon, Trader Joe’s, and many other large and small grocery stores. This competition might hurt the company and its investors in the future.

MY OPINION

I think that Kroger is a great long-term investment due to its position as a good reopening play, positive impacts from the pandemic, its position as a safe investment option, a muted impact from Amazon, Buffett’s increasing stake in the company, as well as e-commerce opportunities. However, tough competition might hurt the company and its investors in the future.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.