Investors have been keeping an eye on shifting healthcare policies and their far-reaching market impacts. While traditional healthcare stocks have delivered mixed results, a new narrative is emerging in the retail and food sectors, one driven by a fresh focus on health and wellness. With Robert F. Kennedy Jr. poised to assume his role as the secretary of the Department of Health and Human Services, his “Make America Healthy Again” platform is already generating significant buzz.
Goldman Sachs is particularly optimistic about select grocery stocks that stand to benefit from this renewed emphasis on health. Among the leading contenders are Kroger (KR), Amazon (AMZN), and Albertsons (ACI). These companies, long established in the consumer staples arena, are well-positioned to capture increased demand for healthier food options and improved safety protocols.
For investors seeking to ride the wave of transformative health policies, here’s an in-depth look at these three stocks and the compelling case for their long-term growth potential.
Stock to Buy #1: Kroger
Based in Cincinnati, Ohio, Kroger (KR) began as a single grocery store in 1883 and has evolved into one of America’s largest supermarket chains, now operating nearly 2,800 stores across 35 states. Valued at $47 billion by market capitalization, shares of this grocery titan have rallied 37% over the past 52 weeks.
Despite last year’s outperformance, Kroger stands at attractive valuation levels, trading at 13.9x earnings and a 0.31x sales ratio. Both metrics are significantly lower than the sector medians of 21.5x and 1.2x.
The food retailer encountered some challenges in its last quarter, as it missed top-line estimates with Q3 revenue of $33.6 billion, slightly down from the same quarter last year, even though its EPS of $0.98 aligned with analyst expectations.
Looking ahead, Kroger is set to report its fourth-quarter earnings on March 4, with analysts expecting revenue of $34.9 billion and EPS of $1.11. Specifically, digital sales, which grew 11% in the previous quarter, are anticipated to drive future revenue growth and sustain momentum.
Earlier this month, Goldman Sachs initiated a “Buy” rating on KR stock with a price target of $70, further reinforcing investor confidence.
Overall, on Wall Street, KR holds a consensus rating of “Moderate Buy.” The stock is currently trading near its average price target of $66.35, while the Street-high target of $75 offers 15% upside potential.
Stock to Buy #2: Amazon
Valued at $2.36 trillion, Amazon (AMZN) is an e-commerce giant renowned for its diverse business segments, including e-commerce, cloud computing, and digital streaming. The company leverages its robust grocery presence through Whole Foods and Amazon Fresh to offer organic, healthy food options while advanced logistics, digital innovation, and contactless delivery protocols further enhance its safety measures.
AMZN shares also performed well in 2024, up 28% over the past 52 weeks. The stock is currently trading 10% below its all-time high of $242.52, achieved on Feb. 4.
Like other “Magnificent 7” stocks, Amazon commands premium pricing, trading at 36x forward earnings, significantly higher than the industry average of 17x. Yet, it sits at an 80% discount to its own five-year historical average.
On Feb. 6, Amazon reported Q4 earnings that smashed expectations, posting 10% sales growth to $187 billion and EPS of $1.86, a 54% increase from last year. This robust performance is tied to its primary growth driver, which is its cloud services business.
Moreover, CEO Andy Jassy expects the current global IT spending split, 90% on on-premises versus 10% on cloud solutions, to reverse over the next 10–15 years, positioning Amazon to capture a larger share of IT budgets.
Supporting its strong operational performance, the company generated $115.8 billion in operating cash flow in the last quarter, demonstrating robust liquidity and a solid capacity to fund strategic investments and shareholder returns.
Given the strong sentiment, analysts maintain a consensus “Strong Buy” rating with a 12-month average price target of $269, indicating upside potential of more than 24%.
Stock to Buy #3: Albertsons
Headquartered in Boise, Idaho, Albertsons (ACI) is one of the nation’s largest food and drug retailers. Operating under multiple banners, it offers a diverse range of grocery, health and beauty, pharmacy, and fuel products while engaging in food manufacturing, distribution, and digital retail services. This extensive operational base sets the stage for its robust market presence.
Valued at $11.9 billion by market cap, shares of ACI are up nearly 5% year-to-date, reflecting strong investor sentiment.
Among the three stocks discussed in this article, Albertsons trades at the most attractive valuation. It trades at 9.6x earnings, significantly lower than the sector median of 16.4x, suggesting that ACI stock is undervalued and represents a compelling opportunity for investors.
Recently, the company raised its dividend yield by 25%, now paying a quarterly dividend of $0.15 per share, resulting in an annual yield of 2.9%. This move reinforces investor confidence and underscores its commitment to shareholder returns.
The company reported its fiscal Q3 earnings on Jan. 8, with adjusted EPS of $0.71, beating estimates by $0.06. Sales reached $18.8 billion, marking a modest 1.2% year-over-year increase, a performance metric that balances its valuation narrative.
Looking ahead, Albertsons is projected to increase revenue to $80.4 billion in the full year 2025, with EPS predicted to reach $2.31. This forward outlook provides a broader context for its current challenges.
Analysts tracking Albertsons have given the stock a consensus “Moderate Buy” rating with a mean price target of $23.56, implying upside potential of 15%.
