We recently published a list of Recession Resistant Investing: 10 Best Grocery Stocks To Buy Now. In this article, we are going to take a look at where The Kroger Co. (NYSE:KR) stands against other best grocery stocks to buy now for recession resistant investing.

Margin Pressure and the Consumer Staples Sector

On April 24, Bryan Spillane, BofA Securities senior consumer analyst, appeared on CNBC’s ‘The Exchange’ to talk about food stocks and how higher costs are weighing on consumers. He said that the biggest incremental headline right now is that costs are a bigger risk than anticipated going into the recent earnings season. Although there is a lot of focus on revenue risk, costs have taken the lead, and tariff risks are also affecting companies across the consumer staples industry.

Companies are sending marketing messages to consumers saying that they won’t be raising prices, which is something consumers didn’t see during COVID-19. These trends are raising concerns about margin pressures across corporate America. Addressing these questions, Spillane said these companies no longer have the ability to price. If there are incremental costs, whether from tariffs or other sources, they will either come from additional cost-cutting or result in margin pressure. Margin pressure is materializing in some major companies in the consumer staples sector, and it is likely to persist into the next quarter as well.

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Are Consumer Staples A Stable Area Right Now?

These trends raise the question of whether consumer staples are an area of stability amid current market volatility and macroeconomic concerns. Spillane said that this is a very similar dynamic to what we have seen in the last month or so, which is that the stocks have held in relatively well, even though earnings estimates have come down.

He further said that we have to be very selective from here onwards. Consumer staple companies that do not have negative earnings revision risks are a decent place to hide amid the current market dynamics. However, he warned that the fundamentals are decelerating for the consumer staple companies. These stocks are likely to remain under pressure if market fundamentals continue the way they are.

Is a Recession on the Horizon?

We discussed the risks of recession looming over the stock market in a recently published article on 10 Best Stocks That Will Always Grow. Here is an excerpt from the article:

Threats of an impending recession are looming over the stock market due to Trump’s tariffs and macroeconomic uncertainty. According to CNBC’s quarterly CFO Council Survey for Q1 2025, a majority of chief financial officers are of the opinion that the economy is likely to fall into a recession in H2 2025. The CFOs said that they were generally “pessimistic” about the overall state of the American economy, and expressed uncertainty about the stock market.

The survey also showed that 95% of the CFOs claimed that their ability to make business decisions is being affected by policy, and a significant number said that although the Trump administration is “delivering on promises,” the government’s dealing with such matters is proving disruptive, extreme, and too chaotic. This is causing considerable difficulty to businesses looking to effectively navigate the present challenges. Therefore, around 60% of the CFOs opined that they expect a recession to materialize in H2 2025; another 15% said that it may appear in 2026.

CNBC reported on April 16 that Fed Chair Jerome Powell announced the day before that the central bank may be caught at the crossroads of supporting economic growth and controlling inflation. He said that although he anticipates lower growth and increased inflation, it is uncertain where the Fed will need to focus its attention. In prepared remarks before the Economic Club of Chicago, he said:

“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”

Powell also did not give any indication of where interest rates could be headed, but remarked that:

“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”

With the risk of an impending recession deepening, let’s look at the 10 best grocery stocks to buy now for recession-resistant investing.

Our Methodology

We sifted through stock screeners, financial media reports, and ETFs to compile a list of 15 major grocery stocks and chose the top 10 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is ordered in ascending order of hedge fund sentiment.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A customer buying an item at a checkout counter in a grocery store.

The Kroger Co. (NYSE:KR)

Number of Hedge Fund Holders: 60

The Kroger Co. (NYSE:KR) is a food and drug retailer that operates supermarkets, fulfillment centers, and multi-department stores. It offers a range of organic food items. Its brand portfolio includes Smart Way, Big K, Heritage Farm, Simple Truth Organic, and Simple Truth. The company operates approximately 2,722 supermarkets, 2,257 pharmacies, and 1,665 fuel centers in 35 US states and the District of Columbia.

On April 3, Guggenheim analyst John Heinbockel raised the firm’s price target on the company to $73 from $71 and kept a Buy rating on the shares. The analyst opined that Kroger Co.’s (NYSE:KR) rising operating momentum from the ESI network re-entry, maturing Media business, and incremental KR Delivery growth should allow the recent multiple expansion to hold.

Kroger Co.’s (NYSE:KR) financials are also showing signs of improvement, which is why it ranks on our list of the best grocery store stocks to buy now. It delivered an 11% growth in digital sales in fiscal Q4 2024, and a 2.4% growth in identical sales without fuel. Operating profit for the quarter reached $912 million. The company’s management is confident in its plans for 2025, and expressed commitment to deliver a total shareholder return of 8% to 11% over time.

Overall, KR ranks 4th on our list of the best grocery stocks to buy now for recession resistant investing. While we acknowledge the potential for KR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than KR but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.