Kroger (NYSE:KR) investors are seeing strong gains today as generic brands prove their worth. The recession may be hammering most retailers, but select niches are doing very well.

It is the battle of the tightwads these days. Yesterday it was McDonald’s (NYSE:MCD) and its value-menu offerings grabbing the attention of investors. Today it is Kroger (NYSE:KR) and its private-label product lineup.

There is a saying in the grocery industry. “Shoppers need to buy groceries, but they do not need to buy groceries from you.”

In an economic downturn like this one, the line could not ring more true. With groceries stores of all sizes and styles popping up seemingly on every suburban street corner, consumers have more choices than ever.

The grocers that have managed to keep their product offerings and prices in line with consumer demands are doing well. The companies that have not been so dynamic are failing.

Fortunately for its investors, Kroger has used its private labels to offer cost-conscious shoppers some high-quality alternatives at lower prices.

During the recent boom cycle, some consumers were embarrassed to be caught in the checkout line with a cart full of generic brands. But in today’s recession, penny pinching and coupon clipping is a new fad. Fortunately for guys like me, it’s hip to be square.

Ramen Noodles: the ultimate recession-proof product

During its latest fiscal quarter, Kroger reported a net income of $349 million or $0.53 per share on revenues of $17.26 billion. Profits were up 8% over last year’s figure of $322 million. That is fantastic growth during one of the worst quarters in the nation’s recent economic history.

Read the full article here:  Investment strategy: Value brands strike again