Market Overview

Amazon, Costco Make Cramer's Shopping List — And Kroger's Crossed Off

Amazon, Costco Make Cramer's Shopping List — And Kroger's Crossed Off, Inc. (NASDAQ: AMZN)'s continued push into the grocery space will result in Kroger Co (NYSE: KR) being its "punching bag," CNBC's Jim Cramer said during his daily "Mad Money" show Monday. 

What Happened

The Wall Street Journal reported in early March that Amazon is looking to create a network of urban grocery stores that would sell food along with other goods like beauty products. But Cramer said his research suggests Amazon's expansion will be "much more significant" than initially reported and will happen "probably sooner rather than later."

Amazon already has exposure to the grocery market through its acquisition of Whole Foods, but any new stores and concepts will be the "icing on the cake," Cramer said. Amazon is still in the early stages of entering the grocery market, but the impact on rival grocery chain Kroger is apparent, the CNBC host said. 

Kroger's most recent earnings report showed revenue fell 9.5 percent from last year. The grocer's guidance for 2019 was nearly 5 percent lower than what the Street expected.

Kroger's ability to hit its targets is a "mighty big if," and investors should avoid buying the stock — even at 11 times earnings, Cramer said.

Why It's Important

Costco Wholesale Corporation (NASDAQ: COST) investors have little to worry about, the CNBC host said. 

The company's membership model gives it a "major edge," and the shopping experience offers consumers "one of the best value propositions" in the market, Cramer said. 

"The bargains at Costco are practically unbeatable." 

What's Next

Kroger will be looking to spend $3 billion on its business in what could prove to be a "kiss of death" for the stock, Cramer said. The grocery chain offers nothing to set it apart from competitors, so it will need to "spend a fortune to fend off its rivals," he said. 

Related Links:

Kroger Analyst Roundup: Credit Suisse Says To Buy Grocer's Stock Ahead Of 'Hockey Stick' Recovery

Kroger, Microsoft Team Up For Challenge To Amazon's Grocery Play

Posted-In: CNBC Grocery Mad Money Whole FoodsLong Ideas Short Ideas Media Trading Ideas Best of Benzinga


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