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4 Grocery Stocks to Buy as COVID-19 Takes a Worse Turn

Ritujay Ghosh
·5 min read

The pandemic has left the retail sector battered and bruised and things have once again started looking gloomy with the astounding surge in new COVID-19 cases. Retailers are already worrying that another round of shutdown may leave them devastated.

However, grocery remains one of the major things that may witness steady growth, as people will start stockpiling essential goods if restrictions are tightened further. The pandemic has already changed the shopping habits of millions, with most people now depending on buying things online. Thus grocers with a strong online arm might just stand to benefit from the situation.

Coronavirus Fears Escalate

The United States has been reporting more than 200,000 new COVID-19 cases daily for the past few days and if experts are to be believed things might worsen in January when winter peaks. On Dec 7, the United States surpassed 15 million coronavirus cases. It took barely a few days for the country to reach 15 million from 14 million, with hospitalization hitting a record high.

States have already started imposing restrictions, and schools and offices are again going vacant. Some places have been particularly hit hard. California has already issued stay-at-home orders and it might not come as a surprise if more states follow suit. People have already started panicking and it is quite likely that they will start stockpiling essential goods like staples and grocery.

Understandably, grocery remains a priority and retailers dealing in them might see a rise in online demand with physical store visits becoming a high-risk affair. E-commerce already has been helping retailers, particularly grocers, and it is likely to continue playing a major role in the coming days too.

Online Grocery Sales Poised to Grow

An increasing number of people are buying grocery online over the past few months to avoid the spread of coronavirus. According to eMarketer, online grocery sales are projected to reach $89.22 billion in 2020, suggesting growth of nearly 53% year over year.

The momentum is likely to continue, with online grocery sales expected to touch $129.72 billion by 2023, accounting for almost 10% of the total annual grocery sales. eMarketer further says that online grocery shoppers too will likely increase to 131 million in 2020, hinting at 41.9% growth from last year. The pandemic has changed the way people have shopped so long and the online mode seems to be the most convenient and preferred way. The trend is likely to stay with total online shoppers projected to reach 147.4 million by 2023.

Our Choices

E-commerce is breathing life into the retail sector. Growing fears of coronavirus and restrictions already being imposed by states might once again confine people to their homes, leading them to stockpile groceries. Below are four stocks carrying a Zacks Rank #2 (Buy) for this opportune time to invest in grocery companies with a strong online arm. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Target Corporation TGT has evolved from just being a pure brick & mortar retailer to an omni-channel entity. The company 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.

The company’s expected earnings growth rate for the current year is 35.5%. The Zacks Consensus Estimate for current-year earnings has improved 21.1% over the past 60 days. 

The Hain Celestial Group, Inc. HAIN offers a wide range of popular better-for-you groceries, snacks and tea. 

The company’s expected earnings growth rate for the current year is 48.8%. The Zacks Consensus Estimate for current-year earnings has improved 9.6% over the past 60 days.

B&G Foods, Inc. BGS, along with its subsidiaries, manufactures, sells and distributes high-quality, shelf-stable, frozen food and household products across the United States, Canada and Puerto Rico.

The company’s expected earnings growth rate for the current year is 43.3%. The Zacks Consensus Estimate for current-year earnings has improved 5.9% over the past 60 days.

United Natural Foods, Inc. 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 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.

The company’s expected earnings growth rate for the current year is 26.5%. Its shares have gained 17.4% the past 30 days.

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