Why Albertsons Companies, Inc. (ACI) is the cheapest and reliable stock to invest in?

In this article we will take a look 7 cheap and reliable stocks worth investing in. Let’s take a look at where Albertsons Companies, Inc. (ACI) compares to other cheap and reliable companies.

Overview of the US retail segment

U.S. retail sales unexpectedly rose in August. Retail sales rose much faster than analysts’ estimates in July, according to a Commerce Department report. They were up 2.1% year-on-year in August, with online sales up 1.4% after a 0.4% decline in July. Additionally, sales at gas stations decreased by 1.2%, reflecting lower pump prices. Combined with the reduced unemployment rate, the retail trade situation caused the Federal Reserve to cut interest rates by half a percentage point.

While auto dealers saw revenue decline, the strength of online shopping offset the decline, suggesting solid fundamentals for the economy through most of the third quarter of 2024. Following this data, the Atlanta Fed raised its estimate of GDP growth in the third quarter of 2024 from 2.5%. to Estimated annual rate of 3.0%. In the second quarter, the economy grew at a rate of 3.0%.

Holiday outlook for US retailers

Holiday season sales typically account for more than half of U.S. retailers’ annual revenues. U.S. retailers are likely to experience “moderate” holiday spirit during the upcoming holiday season, according to Boston Consulting Group estimates. While signs such as cooling inflation point to strong consumer spending, several other factors are likely to weigh on overall spending.

According to a report by Challenger, Gray & Christmas, U.S. retailers are likely to hire fewer holiday workers this holiday season compared to 2023. The main factors driving this trend are a softer labor market and uncertain consumer spending trends. Additionally, a Deloitte forecast showed that U.S. holiday sales will likely grow at their slowest pace in six years. Running out of savings makes customers more conscious during the holiday season.

Boston Consulting Group’s 2024 Holiday Forecasts Survey shows that 28% of consumers plan to increase their spending compared to 2023, and 27% plan to reduce it. 45% plan to spend the same amount. There are reasons for these divided trends. After the pandemic ends, real consumption continues to grow and U.S. household incomes and balance sheets continue to grow. Despite these positive growth rates, global military conflicts, ongoing geopolitical tensions and the upcoming 2024 presidential elections are causing consumer attention to be divided.

Despite the recent cooling, inflation has pushed up prices of consumer staples, tightening the budgets of holiday shoppers. These trends also lead to an increased tendency to search for opportunities and deliberate channel selection.

The story continues

Our methodology

We first consulted stock screeners from Finviz and Yahoo Finance, as well as online rankings, to create a preliminary list of 15 publicly traded retail companies with forward P/E ratios of less than 23 (the broader market is trading at a forward P/ E of 23, according to WSJ data). From this list, we selected the 7 stocks with the most hedge fund ownership in Q2 2024 and used that as a ranking indicator.

Why are we interested in stocks that hedge funds invest in? The reason is simple: our research has shown that we can outperform the market by imitating the best stocks of the best hedge funds. As part of our quarterly newsletter strategy, we select 14 small- and large-cap companies every quarter, and since May 2014, we have returned 275%, outperforming our benchmark by 150 percentage points (see more details here).

7 cheap and reliable stocks worth investing in

Albertsons Companies, Inc. (NYSE:ACI)

Forward P/E: 7.79

Analyst growth potential: 30.22%

Number of hedge fund holders: 59

Albertsons (NYSE:ACI) is an American food and drug retail company, operating retail stores that sell general merchandise, groceries, health and beauty products, fuels, pharmacies, and other items and services through physical stores and digital channels . It operates approximately 2,269 stores in 34 U.S. stores under 20 banners. These include Albertsons, Vons, Randalls, Carrs, Acme, Star Market, Market Street, Kings Food Markets, Haggen and others.

Additionally, the company operates 1,336 branded in-store cafes, 1,725 ​​pharmacies, 402 fuel centers, 19 manufacturing plants and several other digital platforms. Its portfolio of brands includes Open Nature, Signature Care, Signature SELECT, Primo Tabglio, Signature Cafe, Signature Reserve and others.

Albertsons (NYSE:ACI) is on our list of 7 cheap and reliable stocks to invest in because of several strategic initiatives it has undertaken in response to adverse market conditions, highlighting its resilience. The company wants to revitalize its growth rates and is increasingly investing in the “Customers for Life” strategy. The Customer for Life strategy puts customers at the heart of everything it does, driving growth in the number of loyalty members through the launch of a simplified “for U” loyalty program. It is also investing in its omnichannel and digital capabilities to ensure continued year-on-year growth.

The company is making significant progress in its online presence, with digital sales growing 23%. It is improving its liquidity and finances, with cash increasing to $291.1 million and decreasing debt. Albertsons (NYSE:ACI) is also focused on CAPEX, investing $543 million to do so. Opened a new location and remodeled 17 store locations, ensuring greater customer engagement.

In the second quarter of 2024, 59 hedge funds held shares in Albertsons Companies, Inc. (NYSE:ACI). As of Q2 2024, the company’s major shareholder is Stephen Feinberg’s Cerberus Capital Management, with a position worth $3 billion, according to our database.

Overall, ACI takes 2nd place are among the cheap and reliable stocks to invest in. While we recognize ACI’s potential as an investment, our belief is based on the belief that AI stocks have a better chance of delivering higher returns in less time. If you’re looking for AI stocks that show more promise than ACI but are trading at less than 5x, check out our report on cheapest AI stocks.

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Disclosure: None. This article was originally published on Insider Monkey.