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Will Kroger Co’s (NYSE:KR) potential be limited by the Albertsons deal? Jim Cramer weighs in

Posted on by Vaseline

We recently published a list of Jim Cramer’s Latest Calls: 10 Stocks to Buy and Sell Now. Since Kroger Co (NYSE:KR) ranks ninth on the list, it deserves a deeper look.

Jim Cramer spoke again about the importance of investing in individual stocks on a recent program on CNBC, saying that with discipline and patience, novice investors can beat the market by choosing solid stocks with strong fundamentals.

“If you are willing to do your best, average people can beat the averages, as long as you are disciplined and follow the rules,” says Cramer.

Regarding his stock selection process, Cramer said he likes to look for stocks by going through the list of stocks that are hitting new highs. Cramer says this is a good start because momentum often continues to push the same stocks higher and higher unless something fundamentally changes. Cramer said he doesn’t recommend buying stocks when they’re trading at new highs. Instead, he waits for a relapse.

“The new highlist is not a shopping list, it is an inspiration list. You keep an eye on those names and wait for them to come out before you pull the trigger,” Cramer said.

Cramer said you should only invest in stocks if you think they will recover for reasons “unrelated to the broader market.”

For this article, we’ve picked 10 important stocks that Jim Cramer is talking about on his programs these days. We have listed the number of hedge fund investors for each stock. Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research shows that we can outperform the market by imitating the best stock picks from the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (see more details here).

Will Kroger Co's (NYSE:KR) potential be limited by the Albertsons deal? Jim Cramer weighs inWill Kroger Co's (NYSE:KR) potential be limited by the Albertsons deal? Jim Cramer weighs in

Will Kroger Co’s (NYSE:KR) potential be limited by the Albertsons deal? Jim Cramer weighs in

Kroger Co. (NYSE:KR)

Number of hedge fund investors: 46

Jim Cramer said Kroger Co (NYSE:KR) posted a strong quarterly report, but the Albertsons deal is weighing on the stock.

“With the Albertson deal still languishing, I think it puts pressure on the stock price. That’s a shame because I really like it,” Cramer said.

In another program, Cramer said:

“Kroger Co (NYSE:KR) confounded the critics by developing a superior loyalty program, regionalizing their warehousing and creating the best private label private label products available.”

Cramer also highlighted a comment from the CEO during the last earnings call:

“Budget-conscious customers buy more at the beginning of the month to stock up on essential items and groceries.

And as the month progresses, they become more careful with their spending. In response, we support our customers by keeping prices low through promotions including loyalty discounts, personalized offers and fuel rewards. We are also expanding our tiered portfolio of Our Brands products, offering customers exceptional alternatives to national brands that compete on quality, at a noticeably lower price. Our long-term model shows that by keeping prices consistently low, we increase customer loyalty and grow market share. As the food-at-home industry remains competitive, our model creates efficiencies that allow us to invest sustainably in value and maintain competitive price differentials with key competitors.

Read the transcript of the full earnings call here.

Kroger Co (NYSE:KR) reported quarterly revenue of $33.91 billion, up modestly by 0.2% from $33.85 billion in the same quarter last year. The figure also exceeded analyst expectations by $207 million.

Kroger Co (NYSE:KR) said there was a 17% increase in delivery revenue, driven by the company’s Customer Fulfillment Centers, while its online grocery customer base grew 14%. Kroger’s digital sales strategy, once unexpected in the grocery industry, has gained momentum. While no data is available, the launch of 223 new Our Brands products likely increased sales during the quarter.

Overall, Kroger Co (NYSE:KR) ranks 9th on Insider Monkey’s list Jim Cramer’s Latest Calls: 10 Stocks to Buy and Sell Now. While we recognize the potential of Kroger Co (NYSE:KR), our belief lies in the belief that AI stocks hold greater promise for delivering higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than KR but trades at less than five times earnings, check out our report on the cheapest AI stocks.

READ NEXT: Analyst sees new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these stocks.

Disclosure: None. This article was originally published on Insider monkey.

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