Finding the Green in Grocers

Last year I wrote about investing in companies that supply the basic needs of food and shelter as a follow-up to another column where I discussed how economies operate much like Abraham Maslow's hierarchy of needs in the sense that consumers allocate cash flow to basic needs first. Consequently, investing in these areas is a safer and more defensive strategy than investing in other areas, though it may not be as glamorous. And since it's been more than six months since I last reviewed defensive investment strategies, I thought I'd revisit the subject.

Regarding food retailers, I initially focused on Wal-Mart (WMT), Kroger (KR) and Safeway (SWY). While it's been a rocky few years for Safeway, Kroger and Wal-Mart have been relatively steady. But the interesting story here is Safeway. I originally advised buying it as a defensive play in October 2011 when it was about $17. Since then it's gone to $23, then back to $15, and now back to nearly $23, closing 14% higher today. Even as SWY slid to $15 from $22 in the first half of 2012, I advised owning it -- but I couldn't explain the decline in price. Despite concerns about the consumer base being siphoned away by discounters and high-end chains, as I discussed in July 2012, the fundamental story was still strong....243 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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