Coronavirus Pushes Online Grocery Sales in June: 4 Stocks to Buy

Online grocery sales continued to grow in the United States, jumping 9% month over month, per a Brick Meets Click/Mercatus report. The growth from May to April is said to have been driven by retailers that have extended their capacity to handle online orders.

An increasing number of Americans are relying on online shopping as fears of the deadly coronavirus fail to subside. Although the economy is gradually opening, online shopping — particularly grocery — remains the preferred choice.

Online Grocery Sales Jump in June

Online grocery purchase in the United States continued to soar in June. Per a Brick Meets Click/Mercatus report, grocery sales jumped 9% month over month to $7.2 billion in June.

The growth comes from a 16% increase in the total number of orders during June. An estimated 85 million orders were placed in June, up from 73.5 million from May, at an average of $84 per order.

Household penetration rose to 35% in June, with the number of customers ordering groceries online for delivery or pickup reaching 45.6 million versus 43 million in May.

Coronavirus Driving Online Grocery Sales

Online orders for grocery have been on the rise since March when the nation first went under the coronavirus lockdown. Online grocery sales touched $4 billion in March. Since then, it has been growing quickly — jumping to $5.3 billion in April and $6.6 billion in May, as more consumers shifted their shopping to online services, grocery included.

Interestingly, only 16.1 million customers were using online grocery as of August 2019, totaling just $1.2 million in sales.

Stockpiling on fears of coronavirus spreading at a rapid rate saw online grocery sales growing in the first few months. E-commerce came as a savior during the pandemic and now, despite stores reopening, many are opting to shop online given that social distancing measures are still in place and a fresh surge in the number of COVID-19 cases. Also, the new research shows that order frequency ticked up from 1.7 orders per month for active households in May to 1.9 orders in June, demonstrating this increase.

U.S. online grocery sales grew 22% in 2019 and, propelled by high demand from nationwide COVID-19 lockdowns, are expected to surge around 40% this year, according to the Coresight Research U.S. Online Grocery Survey 2020.

Our Choices

Although businesses have slowly started opening, preventive measures to keep the virus at bay are likely to see people staying at home and ordering for all household necessities, including grocery, online. So, it would be prudent to watch out for these five stocks that are likely to rally on a sharp rise in demand for online grocery in the near future.

Amazon.com, Inc. AMZN is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. Its online retail business revolves around the Prime program, well-supported by the company’s massive distribution network.

The company’s expected earnings growth rate for next year is 92.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days.  Amazon has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BG 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 31.1%. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the past 60 days. BG Foods sports a Zacks Rank #1.

The Kroger Co. KR which operates in the thin-margin grocery industry, acquired meal kit company Home Chef and partnered with British online grocery delivery firm Ocado that reinforces its position in the online ordering, automated fulfillment and home delivery spaces. It has also introduced grocery delivery service Kroger Ship.

The company’s expected earnings growth rate for the current year is 28.6%. The Zacks Consensus Estimate for current-year earnings has improved 14.6% over the past 60 days. Kroger carries a Zacks Rank #1.

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 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.

The company’s expected earnings growth rate for the current year is 15.4%. The Zacks Consensus Estimate for current-year earnings has improved 103.4% over the past 60 days. United Naturalsports a Zacks Rank #1.

5 Stocks to Soar Past the Pandemic:

In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now>>

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