Its time to get a little defensive and decrease my cash position a little more to protect myself from the declining dollar and one way to this is by investing in a fundamentally solid company such as Kroger owner of QFC, Fred Meyer and Kroger stores in the mid to eastern regions of the United States. Shares have been butchered considering that this company’s fundamentals are actually improving such as their improvement in profit margins which is up to 2.0% in Q4 2009 (1/2009) compared to 1.3% in Q3 2008 (10/2008) and 1.5% in Q2 2008 (07/2008). One factor that has helped improved their margins is in their cost of sales which has gone down by about 1.2% to 75.8% compared to Q3, Q2 & Q1 2008 which has roughly averaged above 77%. One contributing factor is also in their SG&A which has improved to 75.86% compared to the average 78.33% in the past 3 quarters.
Plus they have also maintained a nice positive cash flow even though they increased their capital expenditures by 33% from Q3 to Q4 2009 as they did it without any additional financing, rather through their own net income stream and it also looks like they are also trying to trim down their debt and stocks outstanding.
On the technical side, Kroger has been traveling on an uptrend channel since April 13, 2009 and today it touched the bottom of the channel giving me the buy signal at $22.38. MACD turned slightly negative today to –0.03 but I'm giving it the benefit of the doubt by giving it 2% room below the 20DMA which is around $21.89. Support is around the $22.17 level.
Source: Google Finance
0 comments:
Post a Comment