In this article, we will take a look at the 10 Best Grocery Stocks to Buy According to Hedge Funds.
The U.S. government’s emphasis on tariffs has created uncertain circumstances for retailers. The National Retail Federation’s (NRF) executive vice president of government relations, David French, said that “binding trade agreements that truly open markets by lowering tariffs, not raising them,” should be the administration’s motive. However, the government has been doing the opposite. NRF has warned that the tariffs will directly lead to higher prices, decreased hiring, and fewer capital expenditures.
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“Retailers have been able to hold the line on pricing so far, but the new tariffs will impact merchandise in the coming weeks. We have heard directly from small retailers who are concerned about their ability to stay in business in the face of these unsustainable tariff rates,” added French.
According to a July poll by the Associated Press and the National Opinion Research Center, almost 90% of Americans considered the cost of groceries a source of stress. 53% of Americans describe it as a ‘major’ source of stress.
During the Q2 FY2026 earnings call, Walmart CEO Doug McMillon highlighted the impact of tariffs. McMillon said that they have been able to mitigate many of the tariff costs so far, but they are rising each week and will continue to do so throughout the year.
“The way things have played out so far, the impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted. But as we replenish inventory at post-tariff price levels, we’ve continued to see our costs increase each week, which we expect will continue into the third and fourth quarters,” said McMillon.
Fed Chairman Jerome Powell has hinted that the central bank is preparing to soon restart interest rate cuts, indicating the labor market’s weakness even as inflation rises. During his final speech on August 22, Powell said, “The balance of risk appears to be shifting.” With the softening of the labor market and inflation risks contained, “the shifting balance of risks may warrant adjusting our policy stance,” added Powell.
With these market trends in mind, let’s turn to the 10 Best Grocery Stocks to Buy According to Hedge Funds.
Our Methodology
To compile the list of the 10 best grocery stocks to buy according to hedge funds, we shortlisted the grocery store companies from the Finviz Screener and Google Search. We then ranked these best grocery stocks in ascending order of the number of hedge fund holders. The data for hedge funds is taken from Insider Monkey’s Hedge Fund database, updated as of Q2 2025.
Note: The data was recorded on August 27.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Grocery Stocks to Buy According to Hedge Funds
10. Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC)
Number of Hedge Fund Holders: 20
Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) is one of the best grocery stocks to buy according to hedge funds. On August 22, Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) announced that customers can enjoy savings of up to 40% off during the Labor Day weekend.
Natural Grocers is celebrating the long weekend from August 29 to September 4, 2025, offering customers notable discounts on select items. The company will also support regenerative organic farming in the U.S. during the month of September with its non-profit partners at the Rodale Institute. Moreover, between September 10 and 13, customers can enjoy additional savings of more than 41% off Natural Grocers’ Always Affordable prices on select organic products.
The company has also announced plans to close its Austin store located at Arbor Walk. The store will close on October 2, 2025, while customers can enjoy closing sales with 25% off on all items from September 2.
Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC), through its subsidiaries, retails natural and organic groceries and dietary supplements in the U.S.
9. Grocery Outlet Holding Corp. (NASDAQ:GO)
Number of Hedge Fund Holders: 30
Grocery Outlet Holding Corp. (NASDAQ:GO) is one of the best grocery stocks to buy according to hedge funds. On August 26, Grocery Outlet Holding Corp. (NASDAQ:GO) announced the appointment of Frank Kerr as the Executive Vice President and Chief Store Operations Officer of the company.
Kerr is set to take the executive role on September 15, 2025. Kerr hails from extensive leadership experience in the grocery retail space and has a strong track record of driving growth, efficiency, and profitability across large stores.
“Frank brings operational expertise across a multitude of functional areas, including store operations, marketing, strategy, and market expansion, to support our independent operators to drive execution and store performance in our next chapter of profitable growth. We look forward to welcoming Frank to our team,” said Jason Potter, President and CEO of Grocery Outlet.
On average, Wall Street analysts have given Grocery Outlet Holding. (NASDAQ:GO) Hold rating, with an average downside of 11%, as of August 27. Over the last month, GO shares have soared over 30% driven by robust Q2 FY2025 results. For the third quarter, the company reaffirmed its guidance, expecting comp sales growth of 1.5% to 2%, gross margin of 30% to 30.5%, and adjusted EPS of $0.17 to $0.19. Grocery Outlet’s earnings are anticipated to be in line with analysts’ estimates, and the company attributes improved EPS guidance to lower expected interest expense. On August 7, Michael Lasser from UBS reiterated a Hold rating on GO, increasing the price target from $17 to $18.
Grocery Outlet Holding Corp. (NASDAQ:GO) is a renowned retailer of name-branded consumables and fresh products sold via a network of independently operated stores.
8. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ)
Number of Hedge Fund Holders: 44
BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is one of the best grocery stocks to buy according to hedge funds. On August 26, BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) announced that it is opening its club in Warner Robins, Georgia, on September 12.
BJ’s new club also features a gas location, which opened on August 27. BJ’s offers everyday essentials in a convenient one-stop shop, offering fresh foods, produce full-service deli items, fresh bakery goods, and household items, among others.
“We’re looking forward to taking care of the families who depend on us in our newest community. We’re bringing unbeatable value, assortment, and convenience to Warner Robins, and we know our members will love saving up to 25% off grocery store prices every day,” said Stacey Ann King, Club Manager, Warner Robins BJ’s Wholesale Club.
BJ’s members can select from several time-saving options, whether shopping online or in-club. The company also offers curbside pick-up, in-club pick-up, same-day delivery, and standard delivery available on BJs.com. Those shopping in-club can use ExpressPay via the BJ’s mobile application. For BJ’s members, the company will offer an exclusive discount of up to 25% off grocery store prices every day. Moreover, a risk-free membership will offer customers a 100% money-back guaranteed membership.
BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) offers membership warehouse clubs in the U.S. The company provides various grocery items, fresh foods, fresh bakery items, household essentials, and gas.
7. Casey’s General Stores, Inc. (NASDAQ:CASY)
Number of Hedge Fund Holders: 47
Casey’s General Stores, Inc. (NASDAQ:CASY) is one of the best grocery stocks to buy according to hedge funds. On August 27, Melius Research raised the price target on Casey’s General Stores, Inc. (NASDAQ:CASY) from $560 to $600, maintaining its Buy rating.
Melius Research upgraded the price target on CASY ahead of the Q1 FY2026 earnings release scheduled on September 8, 2025. Wall Street expects Casey’s General Stores to post earnings per share of $5.06, up 4.76% from $4.83 a year ago. The company is expected to post revenue of around $4.48 billion, up by 9.33% year-over-year.
Casey’s FY2026 outlook indicates an increase in EBITDA of around 10% to 12%, while it expects inside same-store sales to grow between 2% to 5% from a year ago. The company plans to open almost 80 stores in FY2026, through a mix of mergers and acquisitions and new store construction. This follows the company’s three-year strategic plan to expand its presence to almost 500 stores. Considering strong growth prospects, Melius Research remains optimistic on CASY.
Casey’s General Stores, Inc. (NASDAQ:CASY), through its subsidiaries, operates almost 2,900 convenience stores in the U.S. The company offers groceries, freshly prepared food, and self-service fuel.
6. Albertsons Companies, Inc. (NYSE:ACI)
Number of Hedge Fund Holders: 49
Albertsons Companies, Inc. (NYSE:ACI) is one of the best grocery stocks to buy according to hedge funds. On August 27, Albertsons Companies, Inc. (NYSE:ACI) and its subsidiaries entered into a new $4 billion credit agreement.
Albertsons is replacing its previous credit agreement from December 2021. The company has entered into a Fifth Amended and Restated Asset-Based Revolving Credit Agreement. The agreement initiates a $4 billion senior secured revolving credit facility, with provisions for rising commitments. The proceeds will be used for working capital and general corporate purposes.
The latest agreement is set to mature in 2030, including various financial covenants and security interests. This credit agreement will enhance the company’s financial flexibility and operational strategies.
Albertsons Companies, Inc. (NYSE:ACI) is a food and drug retailer in the U.S. The company is engaged in the food and drug retail stores, selling grocery products, general merchandise, health and beauty care, and other items.
5. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 54
Target Corporation (NYSE:TGT) is one of the best grocery stocks to buy according to hedge funds. On August 21, Truist Financial lowered the price target on Target Corporation (NYSE:TGT) from $107 to $102, keeping its Neutral rating on the stock.
Scot Ciccarelli from Truist downgraded the price on TGT following the second quarter FY2025 results. The analyst mentioned that the retailer’s Q2 sales performed slightly better than initially expected, while earnings were in line with previously reset expectations from Q1. Target posted revenue of $25.21 billion, exceeding consensus by $306.39 million. Ciccarelli highlighted that Target is currently benefiting from shrinkage reductions, but these benefits are expected to vanish in 2026.
The analyst pointed out the challenges faced by Target, including declining market share and a focus on cost-cutting measures to support EBIT. Moreover, the company’s new CEO, Michael Fiddelke, is scheduled to take over on February 1, 2026. With this transition, the company signaled that it is rethinking how stores handle fulfillment, a strategic move to overcome challenges and gain fresh momentum.
As of August 27, Target Corporation’s (NYSE:TGT) average price target of $100, based on analysts’ estimates, implies an upside of nearly 2.08% from current levels.
Target Corporation (NYSE:TGT) is a diversified company and gains a major share of its sales from food and beverages. The retailer sells products through its stores and digital channels.
4. Sprouts Farmers Market, Inc. (NASDAQ:SFM)
Number of Hedge Fund Holders: 54
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is one of the best grocery stocks to buy according to hedge funds. On August 20, J. P. Morgan reiterated a Neutral rating on Sprouts Farmers Market, Inc. (NASDAQ:SFM), with the price target at $159.
Thomas Palmer from J. P. Morgan retains the rating on SFM as the analyst sees Sprouts as “uniquely well-positioned in the current health-conscious, additive-adverse consumer environment.” Palmer expects Sprouts Farmers Market to maintain comparable sales and earnings growth above the broader retail industry.
Sprouts mainly focuses on selling fresh, better-for-you, and clean-label products. Palmer pointed out that this is an area where consumer preferences appear to be shifting at an accelerated rate compared to the past. The analyst sees a long runway for the company to grow its store base, indicating potential for physical expansion in the future.
As of August 27, Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) average price target of $182.50, based on analysts’ estimates, implies an upside of almost 26.22% from current levels.
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a specialty natural and organic food retailer. The company sells products made with lifestyle-friendly ingredients such as organic, plant-based, and gluten-free.
3. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 68
The Kroger Co. (NYSE:KR) is one of the best grocery stocks to buy according to hedge funds. The Kroger Co. (NYSE:KR) is set to lay off approximately 1,000 corporate employees, according to an internal memo cited by Bloomberg on August 26.
Kroger is laying off its corporate employees as part of restructuring and minimizing costs. The company wants to refocus on core operations, according to the memo. Kroger is recovering from a failed merger with Albertsons last year. To make the recovery smooth, the company is cutting costs and simplifying its business model. The reduction will not impact store, manufacturing, or distribution center employees.
The interim CEO, Ron Sargent, said that the internal changes are to simplify operations and reallocate resources where they are most effective. “These decisions are never easy, but we know thoughtful, yet difficult, choices are necessary to set our organization up for continued success,” Sargent addressed in the memo.
Kroger will discontinue projects that no longer align with the new business strategies. Moreover, the company plans to reinvest the savings from this cost reduction strategy into lower pricing, opening new stores, and adding more frontline staff.
The Kroger Co. (NYSE:KR) is a food and drug retailer. The company operates multi-department stores, supermarkets, and fulfillment centers throughout the U.S.
2. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 91
Costco Wholesale Corporation (NASDAQ:COST) is one of the best grocery stocks to buy according to hedge funds. On August 26, Jefferies reiterated its Buy rating on Costco Wholesale Corporation (NASDAQ:COST) ahead of the Q4 FY2025 earnings release scheduled on September 25, 2025.
Ahead of the earnings, Wall Street expects the company to post a profit of $5.82 per share, up 9.10% from $5.29 per share a year ago. Costco has exceeded analyst estimates in three of the last four quarters. During Q3 FY2025, the company posted earnings per share of $4.28, surpassing consensus by $0.04.
On August 8, Greg Melich from Evercore ISI maintained the Buy rating on Costco Wholesale Corporation (NASDAQ:COST), keeping the price target at $1,060. Melich kept the rating on COST following the company’s strong sales for the retail month of July 2025. For the four weeks ended August 3, Costco Wholesale posted $20.89 billion in net sales, an increase of 8.5% from $19.26 billion a year ago. The company maintains the momentum from Q3, despite the challenging situation of macroeconomic uncertainty.
As of August 27, Costco Wholesale Corporation’s (NASDAQ:COST) average price target of $1,070, based on analysts’ estimates, implies an upside of almost 12.69% from current levels.
Costco Wholesale Corporation (NASDAQ:COST) is one of the leading retail firms in the U.S. The company offers Food and Sundries, Fresh Food, Non-food, and other items.
1. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 105
Walmart Inc. (NYSE:WMT) is one of the best grocery stocks to buy according to hedge funds. On August 26, Walmart Inc. (NYSE:WMT) revealed new seller tools and initiatives to expand international reach and provide unmatched omnichannel capabilities.
Walmart has introduced new AI-powered tools and seller incentives to assist sellers in growing faster, reaching more customers, and operating more efficiently. The AI tools will simplify operations and increase sales. The tools and capabilities include an AI-powered listing tool and smart assistant, a seller advisor program, shipping settings and services, and a brand portal.
“Walmart has become one of the fastest-growing eCommerce platforms by focusing on what matters most: integrity, seller success, and delivering exceptional experiences for customers. Everything we’re building — from smarter tools to expanded fulfillment and global reach — is designed to accelerate seller growth and empower sellers to serve customers while driving their businesses forward,” said Manish Joneja, senior vice president, Walmart U.S. Marketplace.
Walmart is also launching new seller incentives to support sellers competing during the peak shopping season. The incentives include 0% referral fee on all qualifying toys, a 50% referral fee reduction on all qualifying pet supplies, and up to 100% referral fee reductions on qualifying top-selling items across categories.
Walmart Inc. (NYSE:WMT) operates a chain of supermarkets. Its stores offer food products, including grocery, meat, and dairy products, and other perishables, and non-food products.
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