You may not have an Albertsons grocery store in your town….But is there an Albertsons stock to trade? With all the different names, you might think they’re just another supermarket store in the long list of grocers feeding hungry Americans. But you’re wrong. Grocery giant Albertsons is ranked 53rd in Fortune 500’s list of the largest U.S. corporations by total revenue. In fact, they booked $61 billion in sales in 2019 and plan to list on the NYSE. But the million or billion-dollar question remains, should you buy Albertsons stock when it lists or should you steer clear?
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Does Albertsons Have Stock?
What They Offer
Operating under 20 banners, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Carrs and Haggen; if you want it, they got it.
Albertsons Companies, Inc. offers a variety of baked goods, beverages, baby care, spices, dairy, fruits, vegetables, meat, snacks, and canned goods, as well as pharmacy and health care products.
Like other companies, they’ve gone online. Consumers can scroll and shop from the comfort of their pj’s. Albertsons stock would probably do well in these unprecedented times.
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With 2,269 stores and 267,000 employees, Albertsons is the second-largest supermarket chain in North America after Kroger, which has 2,764 stores.
Back in 2013, a private equity firm, Cerberus Capital Management, bought Albertsons. Fast-forward two years later, Albertson’s bought Safeway for $9.2 billion.
As a result, the entire Albertsons empire, doing business under 20 different names—which includes Safeway, Albertsons, Acme, Haggen, Jewel-Osco, and Vons, just to name a few.
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According to USEC filing’s, Albertsons ranks as either first or second in market share in two-thirds of the 121 areas in which it operates.
Furthermore, they’ve seen a revenue increase from $60 billion in 2018 to $61 billion in 2019. What makes the numbers even more impressive is the net income realized in 2019. In 2018, they only realized a net income of $46 million from $61 billion in revenue. Whereas in 2019, they realized a whopping $400 million.
But still, this only reflects a profit margin of 0.8%; meager even by grocery-industry standards. To their credit, though, they’ve significantly reduced their debt.
At the end of November 2019, the company had about $8.34 billion in net debt. I know that this may seem like a lot, but it was down from $10.52 billion the year prior.
Is Albertsons Privately Owned?
Albertsons is a privately owned company. Which means there isn’t any Albertsons stock to trade until the company goes public as ACI on June 25th, 2020.
A History of Failed IPOs
Cerberus, the New-York based private equity firm, has been seeking an exit for years. In 2015, the grocery chain filed for an IPO to raise close to $1.7 billion.
Unfortunately, they pulled the plug due to a lack of market interest in retail stocks. It also tried to go public through a deal with Rite Aid.
In 2018, the grocer attempted to go public by acquiring much of the drugstore chain Rite Aid in a $24 billion merger. The deal was abandoned due to investor push back.
As a result, we still don’t have Albertsons stock. But if you’re looking for other trading ideas, check out our stock alerts.
Albertsons Refiles for an IPO
Once again, Cerberus filed for an initial public offering on March 6th, 2020, with the Securities and Exchange Commission. Their draft “S-1” registration statement, revealed an offering of $100 million in common stock and $100 million in convertible preferred shares.
But as of now, the SEC has yet to proceed with an IPO that could value Albertsons around $2 billion. For those of you curious in buying shares, the company plans to list the shares under the ticker symbol “ACI.”
The company’s S-1 states that Albertsons won’t receive any proceeds from the offering. Rather, selling shareholders, including private equity firm Cerberus Capital Management, will have an opportunity to cash out their investments.
Meanwhile, this IPO would be one of the few for a grocery store chain on a U.S. exchange. According to Bloomberg, the largest listing was by Grocery Outlet Holding Corp., which raised a hefty $435 million.
Further Opportunity for Albertsons?
Despite its national scale, it has yet to tap one competitive but lucrative market: The Southeastern U.S. market. All things considered, this could be a significant growth opportunity for Albertsons.
Even though they are once again listing in a weak stock market, the grocery industry is one that will stand the test of time. Humans need to eat.
Coupled with the fact that powerhouse Berkshire Hathaway recently disclosed an equity stake in Kroger, prospective investors are on high alert for the upcoming listing.
What Are Some Alternatives to Albertsons Stock?
Until the time comes where you can buy Albertsons stock, it’s worth paying particular attention to the elephant in the room: online grocery shopping.
Industry experts predict online grocery sales to capture 20% of total grocery retail by 2025. Put another way; they are expected to reach a mind-blowing $100 billion in consumer sales, according to a study by the Food Marketing Institute.
In 2019, Walmart—which already sells more groceries in U.S. stores than any other retailer—worked hard to pass Amazon as the leading nation’s online grocery seller.
However, Amazon recently acquired Whole Foods, which puts them toe and toe in the battle for dominance. On no uncertain terms, online retailers like Walmart and Amazon continue to dominate the online retail market. This couldn’t be more true since we’re not allowed to leave the house.
Alternatively, if you’d rather invest in a brick and mortar store, you could consider purchasing shares in the largest supermarket chain in North America, Kroger.
To be honest, Kroger is one of the country’s best companies and best kept secrets. To illustrate, out of all the stocks with a market capitalization over $10 billion, only about 12% have gone up so far in 2020.
Surprisingly, less than 5% have outperformed Kroger stock. Despite the rough start to 2020, Kroger has gained a healthy 5.6%. And even after their gains, KR stock still looks affordable. Food for thought if you’re looking to invest in grocery store stocks. Before you pull the trigger on anything, check out Atom Finance.
To answer your question, whether or not you should buy Albertsons stock when it lists? My answer is this: Do your homework, study the fundamentals and look at your alternatives. The need to eat will not be disappearing anytime soon.
But, as online retailers like Amazon continue to dominate the retail market, the traditional bricks-and-mortar supermarkets might see their profits decline.
For these reasons, it’s a good idea to keep one ear to the ground and do your research. Do I think investing in the food industry is a good idea? Yes. Do I think it should be Albertsons? That’s on you to decide.