1. Albertsons Companies, Inc. (NYSE:ACI)
Number of Hedge Fund Holders: 59
Now, on our list of the 7 Best Organic Food and Farming Stocks to Buy, we have Albertsons Companies, Inc. (NYSE:ACI). Albertsons Companies is a leading food and drug retailer in the U.S. As of June 2024, the company operated 2,269 retail stores, including 1,725 pharmacies, across 34 states under well-known banners such as Albertsons, Safeway, and more. Albertsons also offers a wide range of USDA-certified organic products through its O Organics brand.
In Q1 2024, Albertsons Companies, Inc. (NYSE:ACI) reported net sales of $24.3 billion, a slight increase from $24.1 billion in the prior year, driven by a 1.4% rise in identical sales. Digital sales surged 23%, highlighting the company’s growing online presence. However, net income dropped to $241 million from $417 million due to the lack of a favorable tax benefit from Q1 2023. Gross margin was steady at 27.8%, but selling and administrative expenses rose to 25.9% of revenue, driven by higher wages, merger costs, and operational investments.
Albertsons Companies, Inc. (NYSE:ACI)’s liquidity improved with cash increasing to $291.1 million and reduced debt. The company invested $543 million in CAPEX, including 17 store remodels and a new location. Looking ahead, the company expects challenges from rising associate wages, increased lower-margin pharmacy and digital businesses, and cycling food inflation benefits.
On October 13, 2022, Albertsons Companies, Inc. (NYSE:ACI) announced the merger with Kroger. However, the FTC blocked the merger with a lawsuit on February 26, 2024. On September 6, 2024, the CEOs of Kroger and Albertsons defended the merger, arguing it would lower prices and enhance competition against retail giants like Walmart, Costco, and Amazon.
As for price movement, the company’s stock has declined 2.91% over the past month and 16.99% YTD. The drop is attributed to concerns over Kroger’s $24.5 billion acquisition deal. Trading below the $27.25 offer price indicates investor apprehension over regulatory challenges, especially lawsuits from the FTC and several states.
Despite this uncertainty, analysts view the stock as a compelling investment, with analysts projecting a 31.09% upside from the current price of $19.01. Additionally, 59 hedge funds, with a combined $4.2 billion investment, remain bullish on the stock as of Q2 2024, as per Insider Monkey’s database.
ACI is the Best Organic Food and Farming Stocks To Buy based on hedge fund sentiment. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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