4 Stocks to Buy as Online Grocery Sales Continue to Boom
Online grocery sales have been soaring ever since the coronavirus outbreak, which pushed millions to shop almost everything online. Grocery being essential goods saw was the biggest beneficiary as people stayed at home and stocked up food.
The trend has continued since then. Although millions are vaccinated now, they have finally realized the ease of shopping online. With the pandemic far from over and the Omicron variant of the virus once again igniting fears, grocery stocks like Costco Wholesale Corporation COST, Target Corporation TGT, United Natural Foods UNFI and The Hain Celestial Group HAIN are likely to benefit in the near term.
Grocery Sales Soar in November
Growing demand from customers over the past year has led retailers to shift focus and they are now strengthening their e-commerce arm to boost online grocery sales. Shopping habits have changed drastically over the past year and people are more e-commerce dependent.
According to the latest Brick Meets Click/Mercatus Grocery Shopping Survey, the U.S. online grocery market grew 6% in November to a total of $8.6 billion in sales compared with $8.1 billion a year ago. Of these, $7.0 billion came from the pickup/delivery segments and $1.6 billion from ship-to-home.
The gains were primarily driven by a healthy increase in the active shopper base. The report further mentions that around 69 million U.S. households shopped for groceries online, jumping 16% year over year. One-third of the total monthly active users in November were between the age group of 30- and 40–year olds. Shoppers in this segment have grown 25% year over year.
The importance of pickup grew following the Covid-19 outbreak. This segment saw total dollar sales jumping 29% year over year.
Bright Future for Online Grocery
According to the U.S. Online Grocery Report 2022 released by Spryker Systems, an enterprise digital commerce platform, the online grocery market is poised to grow in the coming days. The report states that around 21% of Americans plan to buy most or all their grocery online by 2024.
The report further states that of the 2,500 surveyed, 77% plan to buy from big box retailers as they have a strong online arm. Moreover, 47% of Americans polled shop at least some of their groceries online, while more than 1 in 4 shoppers buy all their weekly groceries online.
Besides, the report shows that 34% of Americans spend more than $100 on buying groceries online every week. This gives a clear picture of how fast the online grocery segment is growing.
Also, the pandemic is far from over, with the Omicron variant of the coronavirus once again compelling states to reinstate restrictions and mask mandates. This will make people continue to depend on e-commerce for shopping given the safety aspects.
Besides, experts believe that e-commerce is here to stay as grocery players are fast shifting focus to the online business. Groceries are necessities and people will continue buying them.
Our Choices
Given this situation, investing in grocery stocks with a strong online presence should lead to solid returns going forward. We have picked four such stocks, each currently carrying either a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco sells high volumes of food and general merchandise (including household products and appliances) at discounted prices through membership warehouses. Costco is one of the largest warehouse club operators in the United States. COST also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.
Costco’s expected earnings growth rate for the current year is 13.5%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. Shares of COST have gained 4.6% in the past 30 days. Costco has a Zacks Rank #2.
Target has evolved from being a pure brick & mortar retailer to an omni-channel entity. TGT has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.
Target reported third-quarter fiscal 2021 earnings of adjusted earnings of $3.03 per share, beating the Zacks Consensus Estimate of $2.87 and rising 8.7% from the year-ago period. TGT’s total revenues for the quarter came in at $25,652 million, increasing 13.3% year over year and surpassing the Zacks Consensus Estimate of $24,906 million.
Target’s expected earnings growth rate for the current year is 40%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. Shares of TGT have advanced 89.1% year to date. Target carries a Zacks Rank #2.
United Natural Foods is the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada. UNFI carries more than 1,10,000 high-quality natural, organic and specialty products, consisting of national, regional and private label brands in six product categories. These categories are — grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements and sports nutrition, bulk and foodservice products as well as personal care items. United Natural Foods has two principal divisions — the wholesale and the manufacturing and branded products unit.
United Natural Foods’ expected earnings growth rate for the current year is 7.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. Shares of UNFI have advanced 38.9% over the past three months. United Natural Foods carries a Zacks Rank #2.
The Hain Celestial Group produces, distributes, markets, and sells various natural and organic foods as well as personal care products with operations in North America and Europe. HAIN offers popular better-for-you groceries (non-dairy beverages and frozen desserts, flour and baking mixes, cereals, condiments, cooking oils, infant and toddler food, etc.), snacks (potato and vegetable chips, organic tortilla style chips, whole grain chips and popcorn, etc.), and tea (include herb teas such as Lemon Zinger, Peppermint, Mandarin Orange Spice, Cinnamon Apple Spice, Red Zinger, etc.). The Hain Celestial Group is the largest manufacturer in the natural foods segment and has several leading brands.
The Hain Celestial Group’s expected earnings growth rate for the current year is 14.5%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. Shares of HAIN have advanced 6.4% over the past three months. The Hain Celestial Group carries a Zacks Rank #2.
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Target Corporation (TGT) : Free Stock Analysis Report
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