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Coronavirus Crisis Boosts Grocery Apps Download: Stocks to Gain

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·5 min read
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Grocery delivery apps in the United States are seeing record downloads, as people are increasingly avoiding stepping out of their homes in the wake of the coronavirus outbreak that has claimed more than 2,000 lives in the country so far, with confirmed cases exceeding 0.1 million. This is supported by recent data published by app tracking firm Apptopia.

According to the data, average daily downloads in February till Mar 15 for Instacart, Walmart grocery and Shipt apps increased 218%, 160%, and 124%, respectively, thus adding to their profits.

What’s Behind the Spurt in Downloads?

Following the U.S. government’s mandate to practice “social distancing” and imposition of partial lockdown in some states, long queues of people were initially observed in front of stores. This was totally contradictory to the agenda of social distancing and raised the probability of the pandemic’s spread further.

With an increase in the number of positive cases, people have now realized the significance of social distancing and are thus staying home. As a result more people have started to depend on online grocery delivery apps, which present an easier option to shop for essentials. With grocery pickup, consumers only have to interact with a single store employee, while with grocery delivery most orders can simply be left on the doorstep with no person-to-person contact required.

The surge in download of grocery delivery apps was witnessed following the launch of “contactless” delivery option. In this regard, Instacart said its sales growth rates for the week of Mar 15 was 10 times higher than the week before, and had increased by as much as 20 times in areas like California, New York, Washington and Oregon.

Stocks to Gain

Herein, we have mentioned the stocks that are expected to show signs of solid growth in the coming quarters, thanks to their grocery delivery apps, which are seeing increased traction. Meanwhile, they also have a favorable Zacks Rank and solid long-term growth value, therefore making them worthy enough to be included into one’s watchlist.

Per the data by Apptopia, Walmart’s WMT grocery app saw nearly 54,000 downloads on Mar 15. Notably, one-third of shoppers surveyed by Gordon Haskett Research Advisors on Mar 13 said they bought food online over the past week, and of those, 41% were doing so for the first time. For those newbies, Walmart was by far the most popular option, capturing more than half of orders.

In this context it is imperative to mention the fact that, Walmart recently reported that its online sales increased 37% for fiscal-year 2020, which ended on Jan 31, with stronggrowth in online grocery deliveries and pickups being the primary driver. Considering the recent download trends of Walmart Grocery in the backdrop of COVID 19, we may expectits online grocery business to consistently boost the top line of this retail giant. The long-term earnings growth expectation for this Zacks Rank #3 (Hold) stock is 4.9%.

Target’s TGT Shipt app, though hit record numbers, saw only 7,285 downloads on Mar 15, perhaps owing to Target’s move to integrate Shipt’s grocery delivery service into its main app. Nevertheless, Target’s main app saw more than 53,100 daily downloads, breaking the record for daily downloads. Looking ahead, according to the recent projection made by analyst firm eMarketer, Target’s e-commerce business will jump 24% annually to $8.34 billion in 2020, which means the company’s share in the U.S. ecommerce market will grow to 1.2% from 1.1% in 2019.

Surely the sharp spike in Shipt app’s download and consequent order flows will significantly contribute to this growth. The long-term earnings growth expectation for this Zacks Rank #3 stock is 7.9%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Apptopia’s analysis did not include the impact of the coronavirus outbreak on Amazon’s AMZN grocery delivery business, which includes Amazon Fresh and Whole Foods deliveries. However, per an Amazon spokeswoman’s statement given to Bloomberg, the company is witnessing a significant increase in online grocery shopping of late.

In fact, to meet rising online demand, Amazon is offering higher pay to recruit its own warehouse employees to pick and pack Whole Foods groceries, according to an internal document reviewed by Reuters. The company has also announced the hiring of 100,000 full and part-time positions across the United Statesto meet the huge backlog of AmazonFresh and Whole Foods delivery orders. The long-term earnings growth expectation for this Zacks Rank #2 (Buy) stock is 24%.

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