Buy Kroger or Albertsons Stock Amid Recent Market Volatility?

Markets hit another speed bump on Thursday with the S&P 500 and Nasdaq down over 2% as ongoing tariff talks in the U.S. have sparked fears of a resurgence in inflationary pressures.That said, Kroger KR and Albertsons ACI stock have hovered near 52-week highs with both acting as a defensive hedge against recent market volatility. Correlating with such, investors tend to shift to stocks of companies that offer essential goods or services during an economic downturn. Of course, Kroger and Albertsons are of interest as two of the largest grocery retailers. YTD Performance & Valuation The broader indexes have continued to decline over the last few weeks, with the tech-heavy Nasdaq taking the biggest hit and now down 6% in 2025 compared to the S&P 500’s -1%. Year to date, Albertsons stock has spiked +7% to $21 a share with Kroger shares trading at $63 and up a respectable +5%.Image Source: Zacks Investment ResearchConsidering their essentiality, Kroger and Albertsons' attractive valuations are certainly catching investors' attention at the moment. Both trade well under the optimum level of less than 2X sales with KR at 0.3X and ACI at just 0.15X. Plus, KR trades at a 13.1X forward earnings multiple with ACI at 9X.    Image Source: Zacks Investment Research Kroger & Albertsons Outlook Although their valuations appear to be cheap, Kroger and Albertsons' growth has somewhat stalled. This was supposed to be rectified by their proposed merger, but Kroger’s acquisition of Albertsons was officially denied in December as federal and state courts cited concerns of reduced competition and potential price increases for consumers.   Kroger’s total sales are now expected to dip 2% in fiscal 2025 but are projected to stabilize and rise 1% in FY26 to $148.78 billion. On the bottom line, Kroger’s annual earnings are currently slated to drop 6% this year to $4.46 per share compared to EPS of $4.76 in 2024. However, FY26 EPS is forecasted to rebound and increase 7% to $4.77.Image Source: Zacks Investment ResearchAs for Albertsons', its top line is expected to increase 1% in FY25 and is projected to expand another 3% in FY26 to $82.58 billion. Still, Albertsons' annual earnings are slated to drop to $2.29 per share versus EPS of $2.88 last year. Optimistically, FY26 EPS is projected to stabilize and increase 2% to $2.34.Image Source: Zacks Investment Research Dividend ComparisonDespite their underwhelming growth, Kroger and Albertsons stock offer generous dividend yields. Topping the S&P 500’s 1.23% average, Albertsons' annual dividend is 2.89% with Kroger’s at 2.05%.   Image Source: Zacks Investment Research Bottom Line For now, Kroger and Albertsons stock both land a Zacks Rank #3 (Hold). They are certainly worth consideration in regards to defensive safety in the portfolio amid macroeconomic concerns. Keeping this in mind, there may be better hedge options in terms of stocks that also have essential operations but better growth prospects.    Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Kroger Co. (KR): Free Stock Analysis Report Albertsons Companies, Inc. (ACI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks