Please ensure Javascript is enabled for purposes of website accessibility

Why The Kroger Co. Stock Gained 11% Last Month

By Jeremy Bowman - Updated Feb 7, 2018 at 1:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the supermarket chain rose as the company considered potential acquisitions to strengthen its business.

What happened

Shares of Kroger (KR -0.54%) were moving higher last month as the supermarket chain seemed to benefit from rumors that it could make an acquisition that would strengthen its position against new entrants like Amazon.com-Whole Foods and Lidl. As a result, the stock finished the month up 11%, according to data from S&P Global Market Intelligence.

The chart below shows the stock moved up steadily over most of the month.

KR Chart

KR data by YCharts

So what

Kroger's biggest gains came on Jan. 25 as the stock jumped on reports that the company had entered preliminary talks with Alibaba, in a partnership that would surely strengthen Kroger's e-commerce position. The news followed earlier rumblings that Kroger was considering making a bid for Boxed, a buy-in-bulk e-commerce business, or Overstock.com. The company also began rolling out its "Scan, Bag, and Go" program, which allows customers to scan items as they shop so they don't have to stop at a cashier or self-checkout.

The front of a Kroger store.

Image source: Kroger.

All of those moves contributed to the sense that Kroger was strengthening its position against new competition, giving investors confidence that the company would continue growing.

Now what

After January ended, Kroger also completed the sale of its convenience-store business for $2.15 billion to the U.K.-based EG Group, giving it more ammunition to make a big acquisition. Management said the move would help it free up cash to invest in its core grocery business as the company focuses on improving its current store base with new technology rather than adding new stores through acquisitions, its historical strategy. 

The stock has given up a few points in February with the recent market slide, but the company seems to be making the right moves to grow market share. We'll learn more when the company reports earnings a month from now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Kroger Co. Stock Quote
The Kroger Co.
KR
$47.85 (-0.54%) $0.26
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$106.75 (-1.99%) $-2.17
Overstock.com, Inc. Stock Quote
Overstock.com, Inc.
OSTK
$25.48 (-6.29%) $-1.71
Alibaba Group Holding Limited Stock Quote
Alibaba Group Holding Limited
BABA
$114.21 (-1.57%) $-1.82

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.