Value Investing 101: Kroger

"Value stocks, also known as undervalued stocks, trade at a lower price than the company's reputation, earnings outlook, or financial situation would seem to merit."

-- TheStreet.com Glossary (Related term: Undervaluation)

Sept. 14, Bank of America (BAC) announced that it would acquire Merrill Lynch (MER). Bank of America Chairman and CEO Ken Lewis called the acquisition the "deal of a lifetime."

Sept. 24, it was announced that Warren Buffett's Berkshire Hathaway (BRK.A) would invest up to $10 billion in Goldman Sachs (GS). Buffett said Goldman "has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance."

Oct. 1, Buffett made news again when it was announced that Berkshire would buy $3 billion of GE (GE) preferred stock.

Oct. 3, Wells Fargo (WFC) said it reached a definitive agreement to acquire Wachovia (WB). TheStreet.com's Laurie Kulikowski wrote, "A combined Wells Fargo and Wachovia will have assets of $1.42 trillion, deposits of $787 billion, and assets under management, through mutual funds, of $258 billion. Together, the companies have more than 10,000 banks in 39 states and Washington, D.C., 12,000 ATMs and 280,000 employees... For Wells Fargo, the acquisition will give it a first-time banking presence in several states along the East Coast and in the South."

Then Oct. 16, in an op-ed for The New York Times, Buffett wrote that "fears regarding the long-term prosperity of the nation's many sound companies make no sense... most major companies will be setting new profit records 5, 10 and 20 years from now."

So as the financial sector continues to scramble for survival, can the above moves be seen as large-scale examples of value investing?

And as bears continue to run the stock market, is now the time to find a "deal of a lifetime" of your own?

The following are value-centric insights and advice from TheStreet.com.

From Top 5 All-Around-Value Stocks for Nov. 11

Kroger (KR) is one of the nation's largest grocery retailers. Our buy rating for Kroger has been in place since March 2006. Although the company has generally had poor debt management, we feel that the rating is justified due to strengths such as the company's earnings per share growth, revenue growth and increase in net income.

For the second quarter of fiscal 2008, the company reported revenue growth of 11.9% year over year. This growth appears to have trickled down to the company's bottom line, helping to boost EPS by 10.5%. EPS rose from 38 cents in the second quarter of fiscal 2007 to 42 cents in the most recent quarter. Net income also grew during the second quarter, improving 3.5% from $2.76 billion to $2.77 billion.

Management credited its Customer 1st strategy as the basis for its ability to create value for its shareholders. Because of its year-to-date results and management's outlook for the remainder of the fiscal year, Kroger raised its identical sales guidance for fiscal 2008 to a range of 4.5% to 5.5%, excluding fuel. The company confirmed its earnings guidance of $1.85 to $1.90 per diluted share. The company had previously released earnings guidance of $1.83 to $1.90 per diluted share. While Kroger's share price has dropped recently, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of the past year's decline.

Read the full version of Top 5 All-Around-Value Stocks for Nov. 11.

Cramer: Cheap Stocks Aren't (Video, Nov. 10)

Jim Cramer tells investors that bonds will determine whether a so-called cheap stock is a buy.

To watch the video, click the player below:

Plus, don't miss these value-focused videos on TheStreet.com TV: Cramer: The Worthiest Stocks Out There (Nov. 7: Don't just buy because prices are cheap, says Jim Cramer.) and Stryker Not Worth Chasing (Nov. 6: David Peltier, portfolio manager for TheStreet.com Value Investor newsletter, advises against buying shares of medical device maker Stryker (SYK) at these levels, despite the firm's top-line growth and the overall aging of America.).