The new trend of online grocery shopping has started to affect food prices online, as food producers make an effort to cater to high demand for certain food products amid the pandemic. In addition, now that people have gone back to their lockdown lifestyles, a wave of panic purchase of grocery and other essential item could be emerging, which is, in turn, might affect food prices and their online sales.
This is why it could be a good idea to invest in some stocks that are clearly benefiting from the aforementioned trend.
Online Grocery Sales Surge
Since the number of new coronavirus cases continues to increase after states reopened their economy in late April, many state and local authorities have now rolled back their reopening plans. This means that most people have gone back to being confined to their homes; working and studying from home just like they did during the lockdown earlier.
The number of people shopping for groceries and other essential products online has therefore increased, due to this confinement. The trend is evident in June’s increased online grocery sales.
According to a recent survey by Bricks Meet Clicks/Mercatus, online grocery sales climbed 9% last month to an estimated $7.2 billion. The survey conducted from Jun 24-25, takes into consideration an estimated 45.6 million households that used delivery and pickup services for their grocery requirements in June.
The survey also revealed that families placed about 1.9 orders per month, higher than an average of 1.7 orders in May. This rise in online orders was driven by more concerns about the highly infectious virus and greater online fulfilment capacity offered by retailers.
The survey further stated that there was a 57% chance of a shopper placing a new order via a specific online grocery service again within the next 30 days. What makes this particular figure interesting is that in May, only 1% of shoppers felt that way.
A major reason for this swift use of online grocery delivery services was the fact that more independent retailers started to offer online options for pickup and home delivery last month, with retail giants expanding their online operations.
The biggest example of this expansion is Walmart Inc. WMT introducing its new subscription service Walmart+ later in July. The service will allow customers to get their groceries and other essential products delivered at the doorstep.
Online Food Prices Surge as Demand Rises
This increased demand for grocery shopping online has triggered food prices to take the road north as well. According to Adobe Inc. ADBE, online food prices have increased 4.2% over the past six months, Chain Store Age cited. Major reasons behind this uptick are the rise in coronavirus cases and food producers struggling to keep up with the rise in demand.
Campbell Soup Company’s CPB Chief Executive Mark Clouse said that the company witnessed a 140% increase in demand for ready-to-eat soup, which had a considerable impact on manufacturing. In addition, customers trying to cook new recipes from scratch have also had an impact on demand for select ingredients.
4 Stocks to Buy
We have, thus, chosen four stocks that are set to benefit from rising online grocery sales and food prices. All these stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SpartanNash Company SPTN is a distributor and retailer of grocery products. The company has an expected earnings growth rate of 82.7% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has moved 44.6% north in the past 60 days. SpartanNash Company carries a Zacks Rank #1. Shares of the company, which belongs to the Zacks Food – Natural Foods Products industry, have gained 50.2% over the past six months compared to the industry’s decline of 20% during the same period.
The Kroger Co. KR is a retailer. The company has an expected earnings growth rate of 29.1% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has moved 15% north in the past 60 days. Kroger carries a Zacks Rank #1. Shares of the company, which belongs to the Zacks Retail – Supermarkets industry, have gained 17.7% over the past six months compared to the industry’s growth of 13.1% during the same period.
Sprouts Farmers Market, Inc. SFM is a healthy grocery store. The company has an expected earnings growth rate of 35.2% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has moved 4.3% north in the past 60 days. Sprouts Farmers Market carries a Zacks Rank #1. Shares of the company, which belongs to the Zacks Food – Natural Foods Productsindustry, have gained 36.4% over the past six months compared to the industry’s decline of 20% during the same period.
Amazon.com, Inc.’s AMZN online sales have witnessed a significant jump since the pandemic’s advent earlier this year. According to Jefferies’ Brent Thill, the company is driving 43% of total e-commerce growth in 2020 and recent sales have remained strong.
The company has an expected earnings growth rate of 92.1% for the next year. The Zacks Consensus Estimate for the company’s current-year earnings has moved 2.1% north in the past 60 days. Amazon.com carries a Zacks Rank #2. Shares of the company, which belongs to the Zacks Internet – Commerce industry, have gained 66.7% over the past six months compared to the industry’s growth of 48.9% during the same period.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
Campbell Soup Company (CPB) : Free Stock Analysis Report
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
The Kroger Co. (KR) : Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
SpartanNash Company (SPTN) : Free Stock Analysis Report
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