Buy - Price 21.46 on June 23
by Kevin Dann & Partners

Kroger reported first-quarter '09 EPS of 66 cents, versus our 60-cent estimate and 58 cents last year. Identical-store sales growth, ex-fuel, came in at 3.1%, versus our 3% estimate and 5.3% last year. The earnings upside was driven by better than-expected gross margin of 24.4%, versus 22.9% last year. Excluding fuel, gross margins expanded by five basis points (reversing a trend of declines for the prior few quarters), which management attributed to [less lost inventory], advertising, warehouse expenses, and lower diesel fuel prices. [Earnings before interest and taxes, or Ebit] margins of 3.7% were much better than our 3.3% estimate. Total revenues of $22.8 billion declined by 1.5% [from] last year's $23.1 billion and our $23.2 billion estimate. The top-line weakness was due to lower fuel-dollar sales, as the average retail price for a gallon of gas was down 41% year over year. Excluding fuel, total sales increased 3.9%....Our 26 target assumes Kroger can trade at 11.8 times our 2010 EPS estimate of $2.20, and 5.7 times our 2010 [earnings before interest, taxes, depreciation and amortization] estimate of $4.3 billion. We also expect the stock to yield approximately 4% in free cash flow. Market cap: $14.3 billion.

well managed,safe.well financed

From a recent Mad Money show:"This is the only supermarket chain I'm going to recommend. They've done an amazing turnaround. That's an absolute buy."

Cramer: Soft Good = Strong Rally: Jim Cramer likes the rally in soft goods, rails and banks and doesn't see the expected profit-taking selling happening.
Click here to watch the video.

Anything with any sort of higher price point was a disaster in January, and there's a food war going on among Kroger (KR), Safeway (SWY) and Wal-Mart (WMT) that's disastrous for margins.

From a recent Mad Money show: "This is the only supermarket chain I'm going to recommend. They've done an amazing turnaround. That's an absolute buy."

Mad About Options: Costco Update: The Mad About Options crew takes a look back at Jim Cramer's comments about Costco.
Click here to watch the video.

snacks

1.4%

Picked this one up at the right time, when it was low and before it started giving dividends. Has done nothing but be up (up to 98%) from purchase price and started dividends.

Disappointing Outlook

to balance portfolio

Profits slow to 10% on higher labor costs. Potential strike looming.

Poor pick

Stock has fallen 6 of 9 Decembers for a Loss of - 1.56%