Grocery stocks outperformed the market in 2022
Share prices of publicly traded food retailers had a mixed performance in 2022, but most fared better than the broader market.
Many grocery stocks started the year strong, but as inflation rose rapidly in the first half of the year, and the economic outlook turned bleaker amid rising interest rates and fears of a potential recession, the stock prices of several companies faltered.
However, in a year in which the Dow Jones Industrial Average fell 8.9%, the S&P 500 lost 19.4% and the NASDAQ fell 33.1%, even a flat performance from Kroger Co. could be considered a win for investors.
Kroger shares fell 1.5% on the year to close at $44.58 a share, after rising to about $61 earlier in the year before inflation pressures and rising prices became apparent. interest rates, and before the company announced its planned merger with Albertsons in October. The stock fell about 7% to its lowest price of the year following the merger announcement, but has since gained slightly.
However, some analysts believe the company is well positioned for the coming year, given its strong private label offering, fresh food focus and data analytics capabilities, among other attributes.
“We believe Kroger is taking the right steps to defend and grow its market share,” Argus analyst Chris Graja said in a report on Seeking Alpha. “The company has a history of using technology to stock its shelves with the right merchandise and offer the right promotions. While we believe Kroger can compete effectively against Amazon, competition is likely to remain high as Walmart battles Amazon and Target and others are investing more in their digital businesses.”
Albertsons shares followed a similar trajectory, although its share price was down 31.3% on the year, after falling more than 20% following the merger announcement. Analysts linked the October share price decline to the company’s decision to pay a $4 billion dividend to shareholders, which is still delayed by a lawsuit in Washington State Supreme Court.
A Motley Fool analysis noted that while Kroger agreed to pay $34.10 a share for Albertsons, the value of the special dividend is subtracted from that, making the offer now worth $27.25 a share. That’s 20% higher than the company’s year-end closing price, indicating “some skepticism that the deal will go through as negotiated,” Jeremy Bowman, an analyst at Motley Fool, wrote in October. .
Other stocks that fell in 2022 included:
- Ahold Delhaize, down 16.6%, at $28.70, after the company reported 2021 revenue below expectations
- Costco, down 19.6%, at $456.50, after the company reported mixed earnings and sales results, though many analysts are bullish on the stock for next year.
Among natural and organic specialists, Sprouts Farmers Markets and Natural Grocers by Vitamin Cottage found their actions heading in opposite directions. Sprouts rose 9.1% to close the year at $32.37, while Natural Grocers fell 35.6% on the year to close at $9.14.
Wholesale retailers SpartanNash and United Natural Foods Inc. also went in opposite directions in 2022, with SpartanNash up 17.4% and UNFI down 21.1%.
Many other grocery companies were more or less flat during the year, including:
- BJ wholesaler, 1.2% less
- Grocery store, 3.2% more
- Village Super Markets, 0.4% less
Closely owned regional traders Ingles Markets and Weis Markets were up double digits on the year, with Ingles gaining 11.7% and Weis 24.9%.