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We Think Kroger Is A Must Buy At Its 3-Month Low


Kroger's share price has dropped 15% so far in 2016.

We feel it may have a quarter or two of low growth, but should make up for it in the second-half of the year.

Unexpected growth in wages could help raise consumer sentiment and spending. Consumer sentiment has declined for four months in a row.

As Kroger (NYSE:KR) dropped to a three-month low at the end of last week, we snapped up a parcel of shares. We feel recent macro data that points to improvements in U.S. wage growth should be a positive catalyst to increasing sales, helping the company to an improved performance for the remainder of the year.

Retail sales and consumer confidence have been underwhelming so far in 2016, which has led many to believe that companies like Kroger may be struggling for growth in the current quarter. We wouldn't disagree with this sentiment, there is a strong chance that Kroger could be having a disappointing first quarter. But we expect things to pick up in the second quarter if recent positive macro data is anything to go by.

As you can see above consumer sentiment has been on a decline in 2016. It has now had four consecutive months of declines following concerns of weaker economic growth. Despite a lot of reasonably good data coming out from the Fed, perhaps their failure to not raise interest rates has led consumers to believe things are not as great as they appear. According to reports, workers have been expecting little wage...