Some securities make such sense on both a fundamental and technical level that it’d be ridiculous not to pick them up. In my view, grocery giant Kroger (NYSE:KR) stock belongs in this now increasingly exclusive club.
Of course, Kroger stock hasn’t escaped the wild swings that we’ve seen in the markets. With a lack of cohesive leadership at the top, neither investors nor everyday American workers know what to expect.
When uncertainty reigns, Kroger has acted like this generation’s safe-haven asset. However, when it appears that Washington is finally getting in touch with reality, KR has been liable to slip.
Still, I’m encouraged by the fact that Kroger stock has found technical support at the 50-day moving average. Over the next few months, shares should continue to move steadily higher as consumers continue to hoard food and supplies.
As you know, I’ve consistently called for calm and rational thinking. Consider the H1N1 crisis — commonly referred to as the swine flu. Over a decade ago, the pandemic infected millions of Americans and killed 17,000. I encourage people to watch old news clips of that period: We just didn’t panic like we’re doing now.
Unfortunately, once mass panic strikes, it’s extremely difficult to put out the fire. This being the case, I urge investors not to fight the tape. Fundamentally, people won’t stop hoarding until they experience true leadership. As well, the media fanning the flames doesn’t help.
Until then, Kroger stock is an easy buy.
A New Reality Benefits Kroger Stock
If you need more convincing, you can look at two factors that are driving positive changes for this industry. First, let’s talk about the obvious: We’re witnessing an incredible surge in demand for mundane, everyday objects.
In a bull market, everyone loves talking about Amazon (NASDAQ:AMZN) and Shopify (NYSE:SHOP), and they should. These two companies perfectly play into what I’ve termed the Roaring 2020s. Over the next several years, we’ll see a transformative influence of technology in all areas of our lives. Naturally, this phenomenon will include commerce platforms.
But right now, no one is thinking about that. Instead, they’re focused on the very basics of survival. Therefore, you’d expect Kroger stock to move higher, along with names like Costco (NASDAQ:COST) and Clorox (NYSE:CLX). It’s just a matter of supply meeting extreme demand.
However, my second point about Kroger is more important. That is, Kroger stands to benefit from the pandemic’s impact on grocery shopping behavior. According to business solutions firm Acosta, every adult U.S. demographic has reported changes in how they shop for food.
Now, the immediately evident impact is that they’re buying more of it and spending less on discretionary items. But with social distancing becoming an increased concern, we should see a shift from physical purchases to online orders.
According to another survey from IGD and Statista, prior to the pandemic, experts forecast that online grocery shopping in the U.S. will increase every year from 2018 to at least 2023. By then, the study predicts that online sales will total $59.5 billion.
Cynically, as people become more panicked, they’ll physically flood their stores. Soon, though, many will realize the benefits of alternative, online options, bolstering Kroger’s next-generation initiatives.
Kroger Has a Moat for the Foreseeable Future
I don’t want to make light of our present situation. In some ways, though, the outbreak has reinvigorated a difficult grocery industry.
Again, Kroger stock will receive near-term support from shoppers who are shifting dollars from discretionary purchases to essential ones. But this is also an opportunity for Kroger and the like to market their relevance. Currently, the company offers both local deliveries and store pick-up options. Either way, it’s a far more desirable route than waiting in line while others around you are coughing and sneezing.
Additionally, Kroger offers unrivaled convenience and speed. Since you’re ordering directly from the source, the process is more efficient. Plus, if you want your groceries immediately, either the pick-up option or the come-and-go route via the automated checkout machines are readily available.
Finally, Kroger is one of the few companies that have a positive association with the pandemic. Whatever is happening to the cruise liners, Kroger is the opposite. It’s helping people in their hour of need. Ultimately, that too could lift Kroger stock in the long run.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.