In this article, we discuss the 5 best grocery stocks to buy. To read the industry analysis, go directly to the 12 Best Grocery Stocks to Buy.
5. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 52
Target Corporation (NYSE:TGT) is a Minnesota-based big box department store chain. The company has around 2000 operating locations. In the third quarter of 2022, 52 hedge funds had a stake in the company with a combined value of $2.03 billion. In the previous quarter, Target Corporation (NYSE:TGT) was a part of 46 investment portfolios, valued at approximately $1.3 billion.
On November 17, Telsey Advisory analyst Joseph Feldman maintained an Outperform rating on Target Corporation (NYSE:TGT)’s stock and lowered the price target to $175 from $185. The analyst believes that the company should bottom in the next couple of quarters. However, from Q2 2023 onwards, Target Corporation (NYSE:TGT) should increase its profits and sales sequentially.
Target Corporation (NYSE:TGT) is one of the best grocery stocks as it has increased its dividends for 50 years. Its next quarterly dividend will be paid on December 12 to the shareholders of record on November 16. As of December 2, the company has a dividend yield of 2.63%.
Here is what Carillon Tower Advisers specifically said about Target Corporation (NYSE:TGT) in its Q2 2022 investor letter:
“Target Corporation (NYSE:TGT) faced its worst day in decades after trimming its profit forecast for the year due to higher costs. While many of the cost pressures are likely to persist in the near term, the company also struggled with a shift in consumer spending, which resulted in inventory write-downs.”
4. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 59
Dollar General Corporation (NYSE:DG) is a discount retailer headquartered in Goodlettsville, Tennessee. The company has over 18,000 stores across the US. It was founded in 1939 and in 2003 entered the grocery store business. Dollar General Corporation (NYSE:DG) has over 160,000 employees.
Dollar General Corporation (NYSE:DG) reported its Q3 2022 earnings on December 2. The company’s revenue was up 11.1% YoY to $9.46 billion, outperforming the market estimates by $70 million. However, the EPS of $2.33 lagged behind the analyst estimates of $2.55. Despite the miss, Dollar General Corporation (NYSE:DG)’s EPS was up by 12% from Q3 2021.
On December 1, Dollar General Corporation (NYSE:DG) declared a $0.55 quarterly dividend, payable by January 17, to the shareholders of record on January 3. Dollar General Corporation (NYSE:DG) has been raising its dividend for the past six years and as of December 2, the company has a dividend yield of 0.90%. Furthermore, in the third quarter, the company repurchased shares worth $546 million with $2.5 billion worth of shares still remaining under the current repurchase program.
Here is what Aristotle Capital specifically said about Dollar General Corporation (NYSE:DG) in its Q2 2022 investor letter:
“Dollar General Corporation (NYSE:DG) contributed to performance in the second quarter following the report of first quarter earnings that were above expectations. Strength in the second quarter was driven by better-than-expected sales of consumable items. Guidance for the remainder of the year was increased. In addition to solid earnings, forecasts for the increasing expectations of a recession drove positive sentiment towards consumer discretionary companies with more predictable revenue like dollar stores.”
3. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 68
Walmart Inc. (NYSE:WMT) is an American chain of retail stores headquartered in Bentonville, Arkansas. The company operates hypermarkets, department stores, and grocery stores, along with Sam’s Club, a chain of membership-only retail warehouse clubs. After generating $570 billion in FY2021, Walmart Inc. (NYSE:WMT) was the largest company by revenue according to Fortune Global 500.
On December 1, Atlantic Equities analyst Daniela Nedialkova maintained an Outperform rating on Walmart Inc. (NYSE:WMT) and raised the price target to $165 from $150.
Walmart Inc. (NYSE:WMT) makes it to our list of best grocery stocks and is on its way to becoming a dividend king as it has been increasing its dividends for the past 49 years. As of December 2, the company has a dividend yield of 1.46% with an annualized dividend payout of $2.24.
Here is what Leaven Partners has to say about Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
2. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 69
Costco Wholesale Corporation (NASDAQ:COST) is an American chain of membership-only big-box retail stores selling groceries, electronics, computers, furniture, outdoor living, appliances, jewelry, and household essentials along with other things. The company has nearly 840 locations across 15 countries.
In 2022, Costco Wholesale Corporation (NASDAQ:COST) reported revenue growth of 15.8% and EPS growth of 16.6%.
According to our database, Costco Wholesale Corporation (NASDAQ:COST) was a part of 69 investment portfolios in Q3 2022, up from 64 in the previous quarter. Fisher Asset Management was the most significant shareholder in the quarter with over 2.5 million company shares worth over $1.2 billion.
On December 1, Truist analyst Scot Ciccarelli maintained a Buy rating on Costco Wholesale Corporation (NASDAQ:COST)’s shares and trimmed the price target to $557 from $559.
Here is what ClearBridge Investments had to say about Walmart Inc. in its Q2 2021 investor letter:
“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot, Walmart, and Costco has been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 269
Amazon.com, Inc. (NASDAQ:AMZN)’s e-commerce platform is well-diversified and sells gourmet food, groceries, apparel, baby products, consumer electronics, and beauty products along with several other products. The company was launched 27 years ago and operates globally.
Amazon.com, Inc. (NASDAQ:AMZN) experienced a lag in growth at the start of the year. Inflationary effects weren’t favorable for the e-commerce giant. However, in Q3 2022, the company’s North American segment sales were up by 20% YoY to $78.8 billion. The total revenue was $127.10 billion, representing a 14.7% YoY surge. The EPS was $0.28, compared to $0.31 in Q3 2021 but it outperformed the market estimates by $0.07.
On December 1, Cowen analyst John Blackledge maintained a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN)’s shares and raised the price target to $160 from $150.
Here’s what Baron Funds said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-overyear. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”
You can also take a peek at 25 Smartest Countries in the World and Jim Cramer’s Dividend Stocks To Buy.
