We recently published a list of Jim Cramer’s Top 10 Must-Watch Stocks for Savvy Investors. In this article, we are going to take a look at where The Kroger Co. (NYSE:KR) stands against Jim Cramer’s must-watch stocks for savvy investors.
Friday Madness
In a recent episode of Mad Money, Jim Cramer described September 6, Friday, as a dismal trading day following a critical non-farm payrolls report. Bulls hoped for weaker-than-expected hiring and steady wages to prompt the Federal Reserve to consider cutting rates. They got what they wished for, but this led to a surprising turn of events: instead of rallying, the market saw a sharp decline, with the Dow falling 410 points, the S&P dropping 1.73%, and the NASDAQ plummeting 2.55%.
“What an ugly day. Just hideous. We came into today knowing we’d have a critical non-farm payrolls report. If you were a bull, you wanted to see weaker-than-expected hiring with wages pretty much in line, because that’s what the Fed needs to see before it can start cutting rates. Voila, we got exactly what we wished for. Maybe we should have been careful, though, because as soon as we got what we wanted, the bulls vanished and the sellers came out of the woodwork, crushing practically everything. The Dow fell 410 points, the S&P plunged 1.73%, and the NASDAQ plummeted 2.55%.”
Cramer noted that September often brings significant profit-taking, making it historically the weakest month for the market. While this might seem like circular reasoning, it’s more plausible than suggesting that fear of a severe economic slowdown drives the sell-off. In fact, big tech companies, which are central to ongoing powerful trends like data centers and accelerated computing, should be seen as buying opportunities during market dips.
“This market has a September problem. Come September, we’re always hit with a tremendous amount of profit-taking, which is why it’s the weakest month of the year. I know that’s somewhat circular reasoning—we sell because we’ve always sold—but it makes more sense than saying people sold tech because they fear a hard landing. Tech, especially big tech, is something you buy, not sell, into weakness if you’re worried about a more severe slowdown.
Why? Well, because big tech is all about powerful secular themes that can keep going even during a recession—and we’re not getting one. I’m talking about the data center, accelerated computing—they’re not going anywhere. Nevertheless, when anything jars the big tech themes of the moment, the market’s reaction is swift, harsh, and horrible.”
Jim Cramer discussed the aftermath of NVIDIA’s recent report, noting that despite his belief that AI is not a bubble, the stocks related to AI have seen substantial gains, particularly in August. He pointed out that September often triggers increased selling, even when companies report results that meet expectations.
“Look at what happened after the company reported last night. I don’t believe AI is a bubble, but these stocks are still up a great deal, especially in August. And September tends to bring out sellers when you get just in-line numbers.”
The Upcoming Debate Between Harris and Trump
Jim Cramer also commented on the upcoming debate between Vice President Harris and former President Trump, scheduled for Tuesday night. He questioned how much the economy will be a focus, speculating that Trump might try to link Harris to recent inflation trends, while Harris may present herself as a more moderate alternative to President Biden.
“Tuesday night’s the great debate between Vice President Harris and former President Trump. I don’t know how much of a role the economy will play in the debate. If Trump’s on his game, he’ll try to tie Harris to the inflation we’ve experienced since COVID. I suspect that Harris will try to portray herself as more moderate than President Biden.
Either way, I doubt there’ll be anything specifically market-moving, even if the candidates say something newsworthy about their tax plans. Keep in mind that the winner in November likely won’t have the Senate votes to totally rework the tax code, whether we’re talking about Harris’s capital gains tax or Trump’s 19th-century-style tariffs.”
Jim Cramer Urges Investors: “Please Do Not Give Up the Ship Here”
Then he discussed the upcoming release of the Consumer Price Index (CPI) on Wednesday, which will provide another update on inflation. He emphasized that if inflation remains steady or decreases, the Federal Reserve will have more flexibility to lower interest rates and potentially avoid a recession, addressing concerns from many sellers. Cramer urged investors to stay confident and not to abandon their positions based on these uncertainties.
“Wednesday, we get another read on inflation—this time from the Consumer Price Index. What can I say? As long as inflation stays the same or goes lower, the Fed has plenty of leeway to cut interest rates and prevent a recession—the thing so many sellers are worried about. That’s why I keep telling you, please do not give up the ship here.”
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A customer buying an item at a checkout counter in a grocery store.
The Kroger Co. (NYSE:KR)
Number of Hedge Fund Investors: 46
Jim Cramer comments on The Kroger Co. (NYSE:KR)’s forthcoming report and its pursuit of acquiring Albertsons. He anticipates that The Kroger Co. (NYSE:KR) will argue that the merger is crucial and not monopolistic because they have few overlapping stores and plan to sell any that do overlap to well-capitalized competitors. However, Cramer is skeptical about whether these arguments will persuade the Federal Trade Commission, which seems set on blocking the deal.
“Kroger reports, the giant grocery chain, and I think it will once again talk about how much it needs to close the deal to buy Albertsons, and why there’s nothing monopolistic about the merger. They don’t have too many overlapping stores, and they plan to divest the ones that do overlap to well-financed competitors. I’m just not sure any of that matters because the Federal Trade Commission seems determined to block the deal no matter what. Which means Kroger stock will have to stand or fall on its own merits. Fortunately, its own merits are pretty darn good.”
The Kroger Co. (NYSE:KR) is an attractive investment due to its steady earnings and strong financial performance. For Q2 2024, analysts expect The Kroger Co. (NYSE:KR) to report earnings of $0.913 per share and revenue of about $34.12 billion. Despite a slight drop in sales, The Kroger Co. (NYSE:KR) remains profitable thanks to its focus on grocery operations and its investments in digital technology and customer loyalty programs.
Additionally, a potential merger with Albertsons could provide significant benefits, such as increased market share and operational efficiencies, which would strengthen The Kroger Co. (NYSE:KR)’s competitive position and growth outlook. This mix of reliable current performance and promising future opportunities makes The Kroger Co. (NYSE:KR) a compelling choice for investors seeking stability and growth.
Overall KR ranks 6th on our list of Jim Cramer’s must-watch stocks for savvy investors. While we acknowledge the potential of KR as an investment, our conviction lies in the belief that under the radar 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 KR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
