One of the largest grocery companies in the United States, Albertsons employs hundreds of thousands of people. But is this is a good company to invest in?
Albertsons has generated huge profits but also faced many challenges over the last few years, and, as an investor, you need to weigh up the pros and cons of purchasing stock.
Here’s everything you need to know about purchasing Albertsons stock and investing in grocery stores in general.
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Table of Contents
What is Albertsons?
Albertsons is an American grocery company based in Boise, Idaho. Numerous private investors own and operate this company, which hires more than 250,000 employees.
Currently, Albertsons is the second-biggest supermarket company in North America, with more than 2,200 stores in the U.S. and Canada. You probably live close to an Albertsons store.
One of the most recognizable brands in North America, Albertsons has been a huge success and generate massive profits. The company appears in the Fortune 500 list, which showcases organizations in the U.S. that generate the most revenue.
Is Albertsons A Good Investment?
Albertsons operates thousands of stores across the country and generates big profits.
In recent years, Albertsons has created more services in its stores, which has helped the company compete with rivals in an ever-crowded industry. The company now has more than 1,700 pharmacies and 1,200 in-store coffee shops, for example.
Albertsons also develop and sell a wide range of private-label products, which increase profits. These include the Signature Select line of grocery product, as well as the Signature Reserve and Value Corner lines.
Other lines include the O Organics line of organic products and the Lucerne Dairy Farms dairy brand.
Albertsons has also invested in digital retail, with home deliveries and click-and-collect services.
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Why You Can’t Buy Albertsons Stock
As the second-largest supermarket chain in North America, you might think that purchasing stock in Albertsons is a great idea. But you’ll be stopped in your tracks in a hurry, because Albertsons is a private company.
That means you can’t simply log in to your favorite brokerage account and pick up shares of this grocery retailer. Nor can you claim your share of its partner, Safeway, which is also a private company.
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But maybe adding Albertsons stock to your portfolio isn’t such a smart idea after all.
Why Albertsons Stock May Not Be Such A Good Deal
The prohibition on buying shares of Albertsons may not be such a bad thing though.
It’s been widely reported that one of Albertsons largest shareholders has been trying to dump the stock for years.
Following Albertsons failed deal with Rite Aid that shook some investors, the public learned that:
“The scuttled deal is just the latest in a string of disappointments for Cerberus [Albertsons’ private investor], which has unsuccessfully tried to shed Albertsons multiple times,” says CNBC. “Those efforts include an IPO it abandoned at the last minute in 2015 as well as attempts to combine with both Sprouts Farmer Market and Whole Foods Market (now Amazon) last year.”
Not all of Albertsons acquisitions have been met with such disappointment. For example, the company successfully merged with Safeway back in 2015.
Nevertheless, even if you could invest in Albertsons stock, it’s worth paying special attention to the big gorilla in the room: Amazon.
As online retailers like Amazon continue to dominate the retail market, some traditional bricks-and-mortar supermarkets have seen their profits diminish. It is a good idea, therefore, to keep one ear to the ground and research the latest retail trends and developments.
Alternatives to Buying Albertsons Stock
Interested in grocery store stocks? There are a number of companies you can invest in on the open market. Some of the companies could provide you with a significant stream of income.
Like all stocks, however, you need to make sure you understand the market, pay close attention to trends and political developments, and speak to financial experts. This will help you generate the biggest return on your investment. Going into grocery store stocks “blind” will only need to disappointment, and you could lose a great deal of cash.
Keeping this in mind, here are some other grocery store companies that you might want to invest in:
Kroger is the largest supermarket chain in North America. Financial experts believe Kroger’s stock is undervalued at the moment compared to similar companies.
Importantly, Kroger is publicly traded under the ticker symbol KR. So, if you want to buy shares on established trading platform’s like TD Ameritrade’s thinkorswim or on a newer trading platform like Stockpile, you won’t need to do much more than calculate how much you want to invest and place an order to buy shares of KR.
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Unlike conventional supermarkets, Whole Foods specializes in organic, plant-based foods. As more consumers make healthier food choices, Whole Foods have generated big revenues, making this is a good investment choice.
Of course, Whole Foods is no longer independently traded on the public markets. But you can still purchase shares of Whole Foods, albeit indirectly, via its parent company, Amazon.com.
The downside is you won’t be able to gain direct exposure to Whole Foods. The flipside is you will purchase a share of Amazon’s diverse business interests from e-commerce to cloud computing.
When Should You Invest in Grocery Store Stocks?
Total sales generated by grocery stores in the U.S. amounted to a massive $641 billion in the year 2017, making this one of the most successful retail sectors.
Remember, only a handful of supermarket chains dominate this market, and these companies generate large profits. In theory, this should result in good dividends for investors. However, it’s not this simple.
Research shows that consumer demands and attitudes are changing, and some shoppers are spending their money on retailers online, instead of conventional brick-and-mortar stores like Albertsons.
As one of the largest supermarket chains in North America, Albertsons stocks remains inaccessible to ordinary investors. But you may not be missing out when you consider some of its private investors have been looking for an exit over recent years.
Instead, the best alternative to Albertsons stock may well be Amazon, which acquired Whole Foods and therefore combines a strong online and brick-and-mortar presence.
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