3 Grocery Stocks Sinking on Amazon Prime News

BJ stock has slipped below short-term support

Oct 29, 2019 at 2:08 PM
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Strong earnings from a pair of big-cap pharmaceutical firms is keeping the S&P 500 Index (SPX) above water today, though gains are modest due to a negative reaction to Alphabet's (GOOGL) quarterly results. Not all stocks are moving on earnings today, though, with grocery names Kroger Co (NYSE:KR), BJs Wholesale Club Holdings Inc (NYSE:BJ), and Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) selling off on Amazon Prime news.

Kroger Bears Cheer Latest Slide

Kroger stock is down 2.2% at $24.76, on news Amazon (AMZN) will offer free grocery delivery to U.S. Prime members. The security has been selling off since a mid-September rejection at its 320-day moving average, down 7.4%. KR shares are now off 10% year-to-date, and options traders appear to be positioned for even more downside in the near term.

The equity's front-month (FM) Schaeffer's put/call open interest ratio (SOIR) of 1.11 indicates near-the-money puts outweigh calls in the monthly November series. Peak FM open interest sits at the November 24.50 put, and data from Trade-Alert signals buy-to-open activity here. If this is the case, the put buyers expect KR to slide below the strike by expiration at the close on Friday, Nov. 15 -- a time frame that includes the grocer's Nov. 5 analyst day.

Analysts Stay Bullish on BJs Wholesale Club

The shares of BJs Wholesale Club are off 2.4% to trade at $25.27, falling below short-term support in the $25.50-$25.70 region -- a region that sits 50% above its June 2018 initial public offering (IPO) price and is home to its 200-day moving average. The shares were up 17% year-to-date heading into today's trading, and analysts remain upbeat.

Currently, nine of 12 brokerages maintain a "strong buy" rating, with not a single "sell" on the books. Plus, the average 12-month price target of $31.46 is a 24.5% premium to BJ stock's current perch.

Shorts Target Struggling Natural Grocers by Vitamin Cottage

Natural Grocers by Vitamin Cottage shares have been cut in half over the past 12 months, and are down 3.8% today at $8.68. Short sellers have been in the driver's seat, too. These bearish bets rose 5.6% in the most recent reporting period to 992,030 shares, representing 11.1% of NGVC's available float, or 12.7 times the average daily pace of trading.


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