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Pro Analysis

Analyst: Kroger and Dollar Tree to outperform on industry tailwinds, overblown Amazon fears

An employee stocks Greek yogurt in a Kroger supermarket in Peoria, Illinois.
Daniel Acker | Bloomberg | Getty Images
An employee stocks Greek yogurt in a Kroger supermarket in Peoria, Illinois.

Kroger and Dollar Tree will benefit from "strong industry tailwinds" that will carry the food service industry higher in the year to come, according to new analysis by Wells Fargo.

"Food service represents one of the most attractive sectors within consumer," wrote analyst Edward Kelly in a note to clients last Thursday. "The long-term trend in food spending away from the home is alive and well, especially given the share of wallet it commands with Millennials."

The analyst initiated coverage on both Kroger and Dollar Tree at outperform thanks to the foreseen tailwinds and given that Amazon faces "key hurdles" in its entry into the food space.