Kroger Co (NYSE:KR) is a Buy

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By Jacob Maslow

KrogerCostco (NASDAQ:COST) experienced a nice little run-up recently, thanks to its uncoupling from American Express (NYSE:AXP) and its new partnership with Visa (NYSE:V) and Citigroup (NYSE:C). A lot of this company’s analysts and observers are hoping that these new agreements would boost Costco’s profits. Also, Costco has shown solid growth in its segment of the retail industry. That being said, if you are looking for another stock to watch in terms of upward appreciation, you might want to pay attention to supermarket chain Kroger (NYSE:KR).

According to its recent quarterly earnings report, it posted an impressive same-store sales growth numbers. This is extremely important. Don’t look at the total numbers, but look at same-store sales growth. This is a better indicator of overall market attractiveness, and on this front, the grocery chain did not disappoint. On revenues of $25.21 billion, it earned $1.04 in earnings per share. This completely blew away consensus estimates, which placed earnings per share at 90 cents based on revenues of $25.13 billion. Compare this with the previous year’s figures, and you can see why a lot of investors are excited about Kroger. Kroger posted an EPS of 78 cents last year based on $23.23 billion in revenue. Add to the mix the fact that Kroger is engaged in a share buyback program, as well as paying out dividends, and you can see why the stock is looking hot, and will continue to look hot. As long as it continues its positive same-store sales growth, this might be a great stock to pick up. Keep in mind that this recent quarterly earnings report marks the 45th continuous quarter of positive growth in same-store sales. If you’re looking for a potentially undervalued stock, Kroger might be it.

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