Grocer quietly climbs past Whole Foods

Q: Can Kroger remain a hot stock?

A: When you think of stocks that are up big, a familiar grocery store name might not come to mind. Or should it?

Shares of Kroger are up 170% over the past three years and have gained 11% over the past 12 months. That’s a standout performance if you consider the Standard & Poor’s 500 is up just 29% over the past three years and is down 8% over the past year. Kroger shares are now blowing away Whole Foods, which had been the grocery food stock to watch for years.

Kroger will give investors a new data point this week that will indicate if it is keeping the momentum going. The grocery store company is expected to report 4% higher adjusted profit in the fourth quarter when it delivers results March 3, S&P Global Market Intelligence says. The company’s revenue is also seen rising 4% to $26.3 billion.

Shares of Kroger and many other food companies have been getting a lift in this market as investors get defensive and look for profits that can hold up or even rise if the economy softens. But Kroger will need to show it can keep delivering the goods. At Monday’s closing price of $40.20, it’s no longer cheap at nearly 20 times trailing earnings and just 9% away from analysts’ average 18-month price target of $43.80 a share.