Warren Buffett's Hand-Picked Successor, Greg Abel, Has 30% of Berkshire Hathaway's Portfolio Invested in Apple and Alphabet. But There's an Under-the-Radar Berkshire Stock That Is My Top Pick for July.

Kroger (KR) is highlighted as a defensive buy near a 52-week low, trading around $58 (vs. $55 at the end of June) and offering about 24% upside to a $72.50 median Street target. The article cites valuation support—~34x trailing earnings vs ~11x forward and a low 5-year PEG of 0.57—and an attractive dividend yield of 2.63% with a 21% payout ratio and 19 straight years of annual dividend increases. Overall, it frames KR as a downside-protection addition during potential market dips, with moderate bullish sentiment from analysts.

Analysis

KR is interesting less as a “cheap stock” and more as a low-beta hedge against a disorderly equity tape. The market will likely pay for that hedge only when macro anxiety rises; in a calm tape, defensives tend to de-rate because the embedded scarcity value of stable cash flows disappears. The real question is not traffic, but whether margin structure can hold if food deflation, wage pressure, or price investment intensify; that is what determines whether forward earnings are durable or just cyclical peak numbers.

Second-order winners are the largest scale players and private-label ecosystems. If households keep trading down, KR can defend share better than smaller grocers, while branded CPG names with weaker shelf pull can lose mix to store brands. That is a slow-burn margin transfer, not a headline event, and it matters more over the next 6-18 months than the next few sessions.

The contrarian risk is that this is being sold as a defensive “must-own” when it may simply be a volatility trade. If the macro re-accelerates or the market keeps grinding higher, KR can underperform despite the low multiple because investors rotate back to growth and cyclicals. Berkshire ownership is not a fresh catalyst; the bigger signal is that capital is being steered toward higher-compounder exposures, so KR should be treated as ballast, not a conviction alpha name.

Key Decisions for Investors

• Use KR as a portfolio hedge only on market weakness: accumulate on broader risk-off days rather than chasing strength; 6-12 month horizon, with the thesis falsified if KR loses the low-$50s or forward EPS is revised down two quarters in a row.
• Pair trade: long KR / short TGT over the next 1-3 months if consumer data softens further; KR should hold up better in a drawdown, while TGT carries more discretionary sensitivity and margin pressure from promotional activity.
• Watch the next earnings cycle for identical-sales growth, gross margin, and shrink commentary; if management signals that price investment or labor costs are re-accelerating, the ‘defensive’ multiple can compress quickly despite stable traffic.
• Relative-value watchlist: if food-at-home inflation rolls over and private-label share gains accelerate, favor KR over branded packaged-food names such as GIS or KHC; if inflation re-accelerates, reverse that view.
• If you need downside hedging rather than stock selection, prefer KR exposure inside XLP over standalone long here; the edge is in the hedge profile, not in expecting significant idiosyncratic upside.