7 Best Beef Stocks to Buy Now

3. The Kroger Co. (NYSE:KR)

Number of Hedge Funds Holders: 46

The Kroger Co. (NYSE:KR) operates a combination of food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. The company also manufactures and processes food products for sale through stores and online channels. Founded in 1883, it offers processed beef, ham, chicken, and turkey products.

In recent times, the company brought in plant-based beef and bacon items in its stores, integrating plant-based options with traditional meat items. This move is a response to the growing shift in the market, wherein plant-based meat alternatives are highly demanded. As of 2024, the market for meat substitutes has reached a value of $10 billion and is poised to grow at a CAGR of roughly 9% from 2024 to 2029. Thus, Kroger’s entry into this market means it’s on track to realize profits from this segment in the future.

The Kroger Co. (NYSE:KR) reported total sales of $45.3 billion in the first quarter of fiscal 2024 compared to $45.2 billion for the same period last year. Excluding the fuel segment, sales increased by 0.6% in the quarter. It reported a decline of 7 basis points in the gross margin rate compared to the same period last year. The decline was mainly due to lower pharmacy margins and increased pricing investments. However, this was partially offset by a favorable product mix.

Moreover, the company also reported an increase of 22 basis points in general and administrative expenses. This increase was due to planned investments in associate wages and increased incentive plan costs. Kroger Co. (NYSE:KR) expressed intentions to invest in the business to drive long-term sustainable growth.

Rodney McMullan (Kroger’s CEO) stated:

“The long-term investments made by the company to strengthen and diversify the models have enabled it to manage economic cycles and deliver on full-year outlook. By delivering value for customers and investing in associates, Kroger is well positioned to generate attractive results for shareholders.”

Earlier in the year, The Kroger Co. (NYSE:KR) announced intentions to acquire Albertsons Companies, Inc. for a valuation of $24.6 billion. Albertsons Companies, Inc. (NYSE:ACI) generated $24.3 billion in revenue in Q1 2024. The acquisition can significantly boost the Kroger Co.’s earnings. However, the merger has faced scrutiny from the Federal Trade Commission, which believes it could reduce competition and raise grocery prices. The case is now headed to federal court. Hence, investors must keep an eye out for this.

In anticipation of this merger being finalized, the stock’s share price of the stock has followed an upward trajectory, rising by 16% since the start of the year. Additionally, 46 hedge funds tracked by Insider Monkey have invested $4 billion in the company at the end of Q2 2024, placing it among the top 7 beef stocks to buy.