Monday’s IBD 50 Stocks To Watch pick, supermarket leader Kroger (KR), is approaching a new buy point in today’s stock market rally. The stock jumped 4.5% in strong volume early Monday and is within striking distance of a new breakout.
IBD 50 Stocks To Watch: Kroger
Cincinnati-based Kroger is a supermarket chain that operates over 2,700 grocery stores and convenience stores throughout the U.S. Store banners include Kroger, Ralphs, Dillons and Smith’s among others.
In the most recent quarter, reported June 18, earnings per share and sales grew 69% and 12%, respectively, vs. the year-ago period. The earnings results topped the Street’s EPS and sales estimates.
In a news release, CEO Rodney McMullen commented, “Under Restock Kroger, we have made significant investments over the last several years to establish a seamless digital ecosystem, strengthen Our Brands and our personalization capabilities, and to enhance product freshness and quality. These investments helped Kroger deliver improved results in 2019, a strong start to the quarter, and very much came to the forefront as we provided our customers with the fresh food and essentials they have needed during the pandemic.”
On June 25, the company raised its annual dividend from 64 cents to 72 cents. The upcoming quarterly dividend of 18 cents per share will be paid on Sept. 1 to shareholders of record on Aug. 14.
Kroger stock ranks No. 32 in the IBD 50. (The IBD 50 is a list of leading growth stocks with strong relative price strength and top-notch fundamentals.) Kroger was added to the IBD 50 list on June 25.
The stock shows an 88 out of a best-possible 99 EPS Rating and a solid B SMR Rating, according to IBD Stock Checkup. The Earnings Per Share Rating tracks a company’s earnings strength. The SMR Rating analyzes a company’s sales, margins and return on equity.
Industry Group Leader
IBD Stock Checkup also shows that Kroger stock has a good, but not great, 89 out of a highest-possible 99 IBD Composite Rating, making it one of the top-ranked stocks in the supermarket industry. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
Another top-ranked stock in the industry is fellow IBD 50 stock Sprouts Farmers Market (SFM). Sprouts stock is nearing a 26.15 buy point in a seven-week double bottom. Shares are about 2% away from the new entry.
Meanwhile, rival Albertsons (ACI) went public on Friday after being privately held for years. The supermarket chain sold fewer shares than planned and is below its 16 IPO price early Monday.
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Kroger Stock Approaches New Buy Point
Kroger stock is forming a cup with long handle with a 34.60 buy point, according to MarketSmith chart analysis. Shares are about 1% away from the new buy point amid Monday’s 4.5% advance. Volume was tracking sharply higher vs. average in early trade, a sign of strong demand.
A big flaw is that the stock’s relative strength line remains far from its old highs set back on March 19 during the coronavirus stock market crash. Ideally, the RS line should hit a new high on the breakout day to confirm the stock’s position as a stock market leader.
The RS line measures a stock’s price performance vs. the general market. It is the blue line on every IBD daily and weekly chart.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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