We recently published a list of The 9 Best Pizza Stocks to Buy Now. In this article, we take a look at how The Kroger Co. (NYSE:KR) compares to other pizza stocks.
How is the pizza market doing?
Pizza originated in Italy and has since spread like wildfire across the globe. It has always been the first choice of consumers and hence its market is growing till date. As reported in one of our articles on the best pizza stocks to buy, the pizza market is expected to register a compound annual growth rate (CAGR) of 4.45% during the period 2024-2032, growing from $148.6 billion in 2023 to $222.5 billion in 2032. The frozen pizza segment is also expected to grow during the period 2023-2028, reaching a market value of $5.96 billion, registering a compound annual growth rate (CAGR) of 4.96%.
The popularity of pizza can be gauged by statistics showing that there are 245,000 pizzerias worldwide, with about 77,000 of them in the US. The US itself recorded record pizza sales of $46.9 billion in 2022, thanks to the opening of over 7,000 outlets in the eight years to 2022. This underlines the fact that the largest pizza chains in the world are based in the US. Pizza Hut, one of the largest pizza brands in the world, is the oldest, having been founded in Kansas, USA, back in 1958.
What’s going on in the industry?
In the frozen pizza segment, meat toppings dominate the market with a 56% share of sales, while vegetable toppings have a 26% share. In contrast, cheese toppings also compete well with a 14% share, it is reported media.Market.us. DiGiorno, Red Baron and Totino’s Party Pizza are the top frozen pizza brands with the greatest brand recognition.
Recent trends in the pizza market include the increasing demand for vegan pizzas (frozen or otherwise); this evolving pizza market is in full swing as new demands for cheese substitutes, all kinds of pepperoni, Mexican meats like birria and chorizo, and new toppings continue to emerge.
What is new in the industry is the rapidly increasing use of technology by operators. A survey shows that 748 pizza makers in the US consider online ordering to be the new preferred way of consuming pizza and that 78.21% of manufacturers are investing heavily to strengthen their brand presence online. Optimism is also high among pizza makers, as most of them believe that sales will grow over the next twelve months.
So, the pizza market will undoubtedly grow indefinitely (or at least it should), and to capitalize on that growth, you need to know which pizza stocks are the best to buy. So let’s get to our list of the 9 best pizza stocks to buy now.
methodology
To compile our list of the 9 best pizza stocks to buy now, we compiled a list of all the companies that have a significant presence in the pizza industry and the related cheese and flour industries. Then, we further narrowed it down based on various metrics such as institutional ownership, the number of analysts covering the stock, and the overall financial health of each stock. We ranked the top remaining companies by the number of hedge funds that had stakes in them as of December 31, 2018. 2nd quarter 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds invest in. The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (Further details can be found here).
A customer purchases an item at a checkout counter in a grocery store.
The Kroger Co. (NYSE:KR)
Number of hedge fund owners: 46
Upside potential: 11.23%
The Kroger Co. (NYSE:KR) is a U.S.-based retail company that operates supermarkets and department stores across the U.S. The retailer has a strong presence in the frozen pizza segment, selling pizzas of all kinds of flavors.
The stock is poised for winners as The Kroger Co. (NYSE:KR) is doing everything it can to complete its merger with the company’s rival Albertsons Cos. The proposed merger is valued at $25 billion and will mean over 4,000 stores under the Kroger name.
However, the merger is yet to materialize; the trial in this matter is scheduled to take place in September 2024. However, Kroger has announced that it will reduce grocery prices by a whopping $1 billion as the merger takes place to satisfy regulators. So, it seems like the company wants to make the merger happen at any cost, which increases the company’s growth prospects in the coming period, given the market share gain it would bring to Kroger.
Kroger got off to a decent start in the first quarter of 2025, which ended May 25, 2024. The company reported total revenue of $45.3 billion, up 0.6% year over year. However, gross profit margin declined seven basis points as lower pharmacy margins drove down overall margins. Operating expenses also rose 22 basis points in the quarter due to wages and higher incentive plan costs.
The company expects its full-year FIFO operating profit to increase from $3.1 billion in fiscal 2024 to $4.6 billion to $4.8 billion in 2025. In addition, Kroger expects capital expenditures (capex) of $3.4 billion to $3.6 billion and free cash flow of $2.5 billion to $2.7 billion, which says a lot about the company’s future investments while maintaining a healthy cash position.
Kroger continues to expand, launching 346 new proprietary brands. Additionally, the company’s fulfillment centers increased delivery revenue by 17% during the quarter, further demonstrating the company’s robust growth in line with rapidly changing technology.
With the attorneys general of four US states in favor of the planned merger and $1 billion to be invested in lower food prices and another $1.3 billion to improve Albertsons stores, 46 hedge funds (as of Q2 2024) are optimistic about the stock. Warren Buffets Berkshire-Hathaway has invested $2.5 billion in the stock. In addition, the stock has an upside potential of 11.23% according to 17 analysts.
Total KR 2nd place on our list of the best pizza stocks to buy. While we recognize KR’s potential as an investment, we believe some highly undervalued AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for a highly undervalued AI stock that shows more promise than KR but trades at less than 5 times its earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
