In this article, we will look at Recession Resistant Investing: 10 Best Grocery Stocks To Buy Now.
Margin Pressure and the Consumer Staples Sector
On April 24, Bryan Spillane, BofA Securities senior consumer analyst, appeared on CNBC’s ‘The Exchange’ to talk about food stocks and how higher costs are weighing on consumers. He said that the biggest incremental headline right now is that costs are a bigger risk than anticipated going into the recent earnings season. Although there is a lot of focus on revenue risk, costs have taken the lead, and tariff risks are also affecting companies across the consumer staples industry.
Companies are sending marketing messages to consumers saying that they won’t be raising prices, which is something consumers didn’t see during COVID-19. These trends are raising concerns about margin pressures across corporate America. Addressing these questions, Spillane said these companies no longer have the ability to price. If there are incremental costs, whether from tariffs or other sources, they will either come from additional cost-cutting or result in margin pressure. Margin pressure is materializing in some major companies in the consumer staples sector, and it is likely to persist into the next quarter as well.
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Are Consumer Staples A Stable Area Right Now?
These trends raise the question of whether consumer staples are an area of stability amid current market volatility and macroeconomic concerns. Spillane said that this is a very similar dynamic to what we have seen in the last month or so, which is that the stocks have held in relatively well, even though earnings estimates have come down.
He further said that we have to be very selective from here onwards. Consumer staple companies that do not have negative earnings revision risks are a decent place to hide amid the current market dynamics. However, he warned that the fundamentals are decelerating for the consumer staple companies. These stocks are likely to remain under pressure if market fundamentals continue the way they are.
Is a Recession on the Horizon?
We discussed the risks of recession looming over the stock market in a recently published article on 10 Best Stocks That Will Always Grow. Here is an excerpt from the article:
Threats of an impending recession are looming over the stock market due to Trump’s tariffs and macroeconomic uncertainty. According to CNBC’s quarterly CFO Council Survey for Q1 2025, a majority of chief financial officers are of the opinion that the economy is likely to fall into a recession in H2 2025. The CFOs said that they were generally “pessimistic” about the overall state of the American economy, and expressed uncertainty about the stock market.
The survey also showed that 95% of the CFOs claimed that their ability to make business decisions is being affected by policy, and a significant number said that although the Trump administration is “delivering on promises,” the government’s dealing with such matters is proving disruptive, extreme, and too chaotic. This is causing considerable difficulty to businesses looking to effectively navigate the present challenges. Therefore, around 60% of the CFOs opined that they expect a recession to materialize in H2 2025; another 15% said that it may appear in 2026.
CNBC reported on April 16 that Fed Chair Jerome Powell announced the day before that the central bank may be caught at the crossroads of supporting economic growth and controlling inflation. He said that although he anticipates lower growth and increased inflation, it is uncertain where the Fed will need to focus its attention. In prepared remarks before the Economic Club of Chicago, he said:
“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”
Powell also did not give any indication of where interest rates could be headed, but remarked that:
“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
With the risk of an impending recession deepening, let’s look at the 10 best grocery stocks to buy now for recession-resistant investing.
A friendly grocery store team stocking shelves with foodservice products.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 15 major grocery stocks and chose the top 10 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is ordered in ascending order of hedge fund sentiment.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Recession Resistant Investing: 10 Best Grocery Stocks To Buy Now
10. Weis Markets, Inc. (NYSE:WMK)
Number of Hedge Fund Holders: 16
Weis Markets, Inc. (NYSE:WMK) sells food in US states, including groceries, dairy products, fresh produce, meats, frozen foods, deli products, bakery products, general merchandise items, and more. The company owns and operates around 197 retail food stores across the country, many of which also offer online order customer service.
Despite challenges such as supply chain issues and inflation, Weis Markets, Inc.’s (NYSE:WMK) recent financial results for fiscal Q4 2024 reflect a steady improvement in sales and net income. It underwent a 1.2% growth in net sales for the quarter, reaching $1.23 billion. Net income experienced a notable 69% rise, reaching $34.68 million. This improvement was attributed to successful strategic investments in advertising, technology, and pricing.
Weis Markets, Inc.’s (NYSE:WMK) fiscal 2024 results also reflect positive operations, as its net sales grew by 1.6% to $4.77 billion, and net income rose by 5.9% to $109.94 million. The company also has a strong e-commerce standing, reporting a 46% rise in sales and completing various store development projects to support this growth. Management expects to continue this positive momentum in 2025 by expanding its store footprint in key growing markets and addressing supply chain challenges.
9. Dingdong (Cayman) Limited (NYSE:DDL)
Number of Hedge Fund Holders: 16
Dingdong (Cayman) Limited (NYSE:DDL) is a China-based e-commerce company that delivers groceries and other daily life necessities directly to users. Its offerings include fresh produce, meat, seafood, and other items. Its frontline fulfillment grid comprises over 950 frontline fulfillment stations across 29 Chinese cities. The grid is also supported by around 40 regional processing centers that package, sort, label, and store raw products before fulfillment. It takes the tenth spot on our list of the best recession-resistant stocks in the grocery store sector.
The company underwent significant improvement in its fiscal Q4 2024 earnings, reporting an 18.4% increase in Gross Merchandise Volume (GMV) and a notable increase in GAAP and non-GAAP net income, making it another consecutive quarter of profitability. Dingdong (Cayman) Limited’s (NYSE:DDL) total revenue rose by 18.3% compared to last year, supported by an expanded station network and higher user engagement. However, the most notable improvement of all that invoked positive investor sentiment was a 617.9% year-over-year growth in non-GAAP net income, reaching RMB116.7 million. Analysts are also bullish on the stock, and its median price target of $2.54 implies an upside of 81.31% from current levels.
The company attributed its growth trajectory to improved operational efficiency, strategic focus on improving user penetration, expanding product offerings, developing forward warehouse networks in key regions, and introducing new products. Dingdong (Cayman) Limited (NYSE:DDL) expects to continue its growth trajectory with a focus on operational excellence and high-quality product offerings, and plans to maintain non-GAAP profitability in the upcoming quarters.
8. Arko Corp. (NASDAQ:ARKO)
Number of Hedge Fund Holders: 21
Arko Corp. (NASDAQ:ARKO) is an independent convenience store operator with four segments: Retail, Wholesale, Fleet Fueling, and GPMP. The company operates its stores under a brand portfolio of more than 25 regional brands, including Admiral, Apple Market, Flash Market, Dixie Mart, 1-Stop, Handy Mart, Jetz, Jiffi Stop, and more.
The company is making considerable progress in its dealerization program, exceeding its initial conversion goal by transitioning over 150 retail stores to dealer sites in fiscal year 2024. Arko Corp. (NASDAQ:ARKO) plans to do the same for over 100 stores by the end of fiscal Q1 2025, reflecting its focus on optimizing its retail operations and ranking it eighth on our list of grocery stocks for recession-resistant investing.
It also attained a 200 basis point improvement in the OTP category’s gross margin in fiscal Q4 2024, further extending the gap between traditional cigarettes and higher-margin OTP products. This highlights Arko Corp.’s (NASDAQ:ARKO) focus on boosting profitability in this segment, which bodes well for its future operations.
7. Grocery Outlet Holding Corp. (NASDAQ:GO)
Number of Hedge Fund Holders: 33
Grocery Outlet Holding Corp. (NASDAQ:GO) is a retailer that sells fresh food products and name-brand consumables through an elaborate network of independently operated stores. Its product offerings include fresh meat and seafood, staples, refrigerated and frozen food, and other items.
On April 16, Jefferies analyst Corey Tarlowe upgraded the rating on Grocery Outlet Holding Corp. (NASDAQ:GO) and set a price target of $18.00. The analyst supported the positive rating with the company’s potential for recovery and growth. Grocery Outlet Holding Corp. (NASDAQ:GO) holds a competitive market advantage because of its position as a low-price grocery store. This holds especially true in economic downturns, where the company could outperform its competitors.
The analyst further opined that although the company has experienced challenges with enterprise-wide technology issues in the past, its new management is taking strategic initiatives to resolve these problems and streamline its operations. This presents an opportunity for upside potential. Tarlowe also stated that management’s focus on expanding units in existing markets and solid traffic trends are anticipated to support future growth, with expected improvements in EBITDA margins and same-store sales over the coming few years.
6. Sprouts Farmers Market, Inc. (NASDAQ:SFM)
Number of Hedge Fund Holders: 47
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a specialty natural and organic food retailer that offers a specialty grocery experience. Its products are made of organic, plant-based, gluten-free, and similar lifestyle-friendly ingredients. The company operates around 407 stores in 23 states and takes the sixth spot on our list of the best grocery stocks to buy for recession-resistant investing.
On March 17, Deutsche Bank upgraded Sprouts Farmers Market, Inc. (NASDAQ:SFM) to Buy from Hold with a $190 price target. The analyst said the firm holds a “high conviction” in its growth outlook, primarily because of its differentiated product assortment and a transition to healthier consumer eating trends. The firm told investors in a research note that it had been a fan of the Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) management team and story but was waiting for a more suitable entry point.
The company also has strong financials, as it reported a 59.2% growth in net income in fiscal Q4 2024 while net sales rose 17.5% year-over-year. Similarly, net income for the full year grew by 47% to $380 million, while revenues grew by 12.9% to $7.7 billion. This improvement was attributed to broad-based and balanced growth across channels, geographies, baskets, and traffic.
5. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 56
Target Corporation (NYSE:TGT) is a retail giant operating over 2,000 discount department stores and hypermarkets across the US and Canada. It serves its customers various items, including food, everyday essentials, differentiated merchandise at discounted prices, and general merchandise. Its merchandise categories span organic food and beverages, groceries, dairy, and others. The company ranks on our list of the best grocery stocks to buy in a recession.
Although Target Corporation’s (NYSE:TGT) stock forecast has suffered due to rising tariffs, bulls still see a silver lining. Despite consumer spending shifts, margin pressures, and tariff risks, some analysts believe the company’s focus on affordable goods and US-based supply chains may help it combat the current challenges.
On April 21, Raymond James upgraded Target Corporation (NYSE:TGT) to Outperform, giving it a vote of confidence. Although the firm’s price target wasn’t revealed, analysts opined that the company’s operational model holds the capacity to weather macro headwinds better than others. The firm’s analysts further said they believed in Target Corporation’s (NYSE:TGT) core value proposition and pricing power, which help it maintain market share in a challenging environment.
4. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 60
The Kroger Co. (NYSE:KR) is a food and drug retailer that operates supermarkets, fulfillment centers, and multi-department stores. It offers a range of organic food items. Its brand portfolio includes Smart Way, Big K, Heritage Farm, Simple Truth Organic, and Simple Truth. The company operates approximately 2,722 supermarkets, 2,257 pharmacies, and 1,665 fuel centers in 35 US states and the District of Columbia.
On April 3, Guggenheim analyst John Heinbockel raised the firm’s price target on the company to $73 from $71 and kept a Buy rating on the shares. The analyst opined that Kroger Co.’s (NYSE:KR) rising operating momentum from the ESI network re-entry, maturing Media business, and incremental KR Delivery growth should allow the recent multiple expansion to hold.
Kroger Co.’s (NYSE:KR) financials are also showing signs of improvement, which is why it ranks on our list of the best grocery store stocks to buy now. It delivered an 11% growth in digital sales in fiscal Q4 2024, and a 2.4% growth in identical sales without fuel. Operating profit for the quarter reached $912 million. The company’s management is confident in its plans for 2025, and expressed commitment to deliver a total shareholder return of 8% to 11% over time.
3. Albertsons Companies, Inc. (NYSE:ACI)
Number of Hedge Fund Holders: 70
Albertsons Companies, Inc. (NYSE:ACI) is a US-based food and drug retailer. It has over 2,269 stores across 34 states and the District of Columbia under 20 banners, including Star Market, Shaw’s, Albertsons, Kings Food Markets, United Supermarkets, Haggen, Kings Food Markets, Acme, Carrs, and more. In a report released on April 16, Bill Kirk from Roth MKM reiterated a Buy rating on Albertsons Companies, Inc. (NYSE:ACI) and set a price target of $23.00.
Robert Ohmes, an analyst from Bank of America Securities, reiterated a Hold rating on the company on the same day, highlighting that margin pressures are likely to continue due to Albertsons Companies, Inc.’s (NYSE:ACI) ongoing investments in value, customer experience, and digital investments. However, he also said that these initiatives may hinder short-term upside only, positioning the company well for long-term growth. The analyst also highlighted that the company’s fiscal Q4 2024 adjusted EPS surpassed expectations, with pharmacy and digital sales experiencing notable growth.
Its e-commerce sector underwent a notable 24% growth for both fiscal Q4 and 2024, with first-party sales significantly surpassing third-party growth. In addition, Albertsons Companies, Inc.’s (NYSE:ACI) loyalty membership increased significantly by over 15% year over year, reaching more than 45 million members. Total revenue grew by 10% over 2023, above the company’s upper single-digit longer-term forecast and reflecting positive operations.
Longleaf Partners Fund stated the following regarding Albertsons Companies, Inc. (NYSE:ACI) in its Q1 2025 investor letter:
“Albertsons Companies, Inc. (NYSE:ACI) – US grocery retailer Albertsons was a contributor for the quarter. Albertsons was a new purchase in 2024, after we had followed the company and its predecessors for years. In an otherwise turbulent quarter, Albertsons stands out as a stable business that remains undervalued because it had fallen off the radar during a protracted deal process with Kroger that ultimately failed. The company should grow at a moderate pace and has plenty of financial firepower to repurchase shares, all while it has multiple strategic options (such as unlocking its real estate value and/or selling non-core markets) to realize value per share.”
2. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 96
Costco Wholesale Corporation (NASDAQ:COST) is the second-best recession-resistant stock on our list. It operates membership-only big box warehouse club stores and is one of the most popular department stores in the US. It offers its customers elaborate offerings, including food, beverages, groceries, and more.
Costco Wholesale Corporation (NASDAQ:COST) announced a 6.4% growth in its same-store sales for the five weeks ending April 6, with its US stores undergoing a higher 7.5% rise. At a time when consumer confidence is falling and threats of a recession are hitting the stock market, these numbers show that Costco Wholesale Corporation (NASDAQ:COST) is one of the most resilient retailers in the sector. US comps rose by an even better 8.7% for the period, excluding gas.
The company also delivered strong comparable sales in fiscal Q2 2025, rising 9.1% (excluding fuel prices and currency exchange) and reflecting strong demand for its offerings. Its e-commerce sales also grew by 22.2%, demonstrating solid consumer appetite even during turbulent market conditions.
1. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 116
Walmart Inc. (NYSE:WMT) is an omnichannel retailer operating retail and wholesale stores, clubs, e-commerce websites, and mobile applications. It offers various items, including food, beverages, general merchandise, electronics, and more.
In a report released on April 18, Greg Melich from Evercore ISI maintained a Buy rating on Walmart Inc. (NYSE:WMT), setting a $100.00 price target. The company’s same-store sales are a critical metric for investors. It reported a 4.6% year-over-year growth during its latest fiscal quarter, making it at least the 24th consecutive quarter reporting positive metric. This shows that Walmart Inc. (NYSE:WMT) holds the position to navigate whichever economic headwinds are put in its way.
The company’s global advertising business is another crucial factor, as it is continuously reporting positive results. Analysts expect it to be Walmart Inc.’s (NYSE:WMT) largest driver of operating income, surpassing even sales. Over the last year, the company’s global advertising grew 27% to about $4.4 billion. Global membership income also rose 21% to about $3.8 billion.
Overall, WMT ranks first among the best grocery stocks to buy now for recession-resistant investing. While we acknowledge the potential of grocery store stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than WMT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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