surprised! Grocery stocks crush 2024 targets | Don’t ignore this chart!

Wealthy consumers benefit from higher stock and real estate appreciation, while lower-income Americans are struggling with higher prices, and many are falling behind on credit card debt. Meanwhile, the Federal Reserve cabled that inflation could be much more stubborn than initially expected.

Nonetheless, consumers still need to shop for basic necessities like groceries. If inflation continues, it makes sense to invest in essentials. However, large retailers that primarily carry “grocery” items are uniquely diverse and their operations are differentiated and complex.

When considering major consumer staples sector companies such as Walmart (WMT), Costco (COST), Sprouts Farmers Market (SFM), and Kroger (KR), note that Walmart and Costco are typically categorized as “general stores” or “general stores.” It’s important to do this. “Discount store.” In contrast, Sprouts and Kroger are specifically classified as “food retailers.” But all four companies compete in the grocery sector, an important sector given today’s inflationary environment.

So, considering this common ground of competition, how can you determine which company is more advantageous or more investable than the next?

Overview of 4 retailers

Take a look at the big picture for all four stocks using: StockChartsACP Layout This shows that WMT, COST, and SFM are all showing a strong upward trend and have hit new all-time highs. KR is the only one of the four stocks currently in decline, failing to challenge the 2022 high of $59.70.

Chart 1. Daily chart of Walmart, Costco, Sprout Farmers Market, and Kroger. While KR fell, WMT, COST, and SFM hit all-time highs.Chart source: StockChartsACP. For educational purposes.

Walmart has a gap, but can it maintain its upward momentum?

Chart 2. Walmart’s daily chart. Note the breakaway gap, which has a strong historical tendency to continue rising. But where is the volume behind the movement?Chart source: StockCharts.com. For educational purposes.

According to technical analyst Thomas Bulkowki, WMT saw a strong surge after earnings through a breakthrough gap, which is unlikely to be filled within a week (1%). However, given the trading volume with little follow-through, this is not the only sign that the stock is expected to fall. Money Flow Index (MFI)The volume-weighted RSI, , shows a shift from flat to slightly bearish. As prices continue to rise, buying pressure drops, indicating a potential downtrend.

Nonetheless, relative performance to the Staples sector (XLP) and the S&P 500 ($SPX) is relatively strong, up nearly 15% and 10%, respectively.

Runaway gaps tend not to be filled immediately, but other technical factors suggest that they will be filled sooner rather than later. It’s still floating in the air though. And determining whether this is a strong investment essentially requires comparing it against informed analyst targets (and overall economic conditions).

Costco is soaring.

Compared to its industry and the S&P 500, Costco’s performance of 27% and 22%, respectively, is notable but not exceptional. However, MFI shows that the stock is in overbought territory with a slight bearish differential. This suggests that the buying pressure that has driven valuations may be waning. If COST declines, it may find support at previous highs of $775.75 and $750.

Chart 3. Costco daily chart. COST is surging, but watch out for decreasing volume.Chart source: StockCharts.com. For educational purposes.

Steady rise of the bean sprout farmers market

Chart 4. Daily chart of the bean sprout agricultural product market. Once a “hidden gem,” SFM is one of the most impressive performers in the commodities sector.Chart source: StockCharts.com. For educational purposes.

Also in the realm of all-time highs is SFM. We covered it last December in an article called Sprouts Farmers Market: A Hidden Gem on the Corner of Wall and Main Street? SFM’s rally proved to be one of the most impressive performances in the sector. It is the strongest performer of the four companies in this article, outperforming its sector by nearly 78% and the S&P by just over 70%.

SFM has entered “overbought” territory once again, and although it doesn’t look like it will be able to sustain the rally without the drop in volume, it looks like SFM will continue to surprise Wall Street in the coming months. Therefore, this is a stock that can be considered after favorable downtrends and strong signs of a bullish reversal.

Kroger: Retreat or comeback?

Kroger is the weakest performer of the four discussed in this article. The most recent high of $59 was the third retest of the 2022 high of $59.70, and then as you can see, it failed. However, if you are bullish on Kroger or looking to accumulate it as part of a diversification strategy, you might want to wait until Kroger gets back to 50%. Fibonacci retracement It’s around the $51 range.

Chart 5. KROGER’s daily chart. Is there still reason to be optimistic about KR? Worst performer of the bunch. But if you’re looking to build up KR, it’s getting closer to a reasonable purchase level.Chart source: StockCharts.com. For educational purposes.

takeout

Staples stock may not be flashy, but in a high-inflation environment, some of these seemingly boring stocks have turned out to be some of the hottest stocks on Wall Street. Major companies like Walmart, Costco, Sprouts Farmers Market and Kroger benefit from continued demand for groceries. In particular, Walmart, Costco, and Sprout are hitting record highs, while Kroger is performing poorly. Interestingly, 2024 analyst targets for these stocks have often been exceeded, highlighting that Wall Street has underestimated their potential.

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting with a financial professional.