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Here's Why You Should Hold on to Grocery Outlet (GO) Stock

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Grocery Outlet Holding Corp. (GO - Free Report) looks well-poised on the back of its unique business model, strength in product offerings and store-growth endeavors. The company is also focusing on efficient marketing communications to bolster sales and build dynamic relationships with customers. It has also been emphasizing on digital marketing. We believe Grocery Outlet will continue to benefit from the coronavirus-induced hoarding, given the burgeoning demand for essential grocery and stay-at-home trends.

Grocery Outlet’s flexible sourcing and distribution business model that differentiates it from traditional retailers poise the company well for sustainable growth. This helps it to offer quality, name-brand consumables and fresh products at exceptional value. Meanwhile, the company’s product offering is ever-changing with a constant rotation of opportunistic products, complemented by everyday staple items. In addition, the company’s “WOW!” deals coupled with updated website, modernized logo and new marketing campaign Welcome to Bargain Bliss look impressive.

Speaking of store-growth opportunities, Grocery Outlet continues to build its real estate pipeline to support 10% annual unit growth. Notably, the company has been undertaking strategic investments to improve functionality and scalability. These include enhanced point of sale, warehouse management, vendor tracking, store communications, real estate lease management, and financial planning and analysis. In fact, management believes that there is room to establish 4,800 locations nationally, in the long term.

What’s More?

The aforementioned strengths have aided Grocery Outlet to deliver comparable-store sales growth for 16 straight years, with the metric rising 5.2% for 2019. We believe the company’s compelling value proposition will continue to attract bargain hunters, encourage customers to revisit stores and increase basket sizes. Cumulatively, these will drive comparable-store sales. The company’s opportunistic purchasing strategy, inventory optimization, marketing initiatives and product offerings will keep boosting the metric. Management had earlier notified that for the fourth quarter through Nov 11, comparable store sales are tracking in the positive mid-single digits.

Impressively, the EmeryVille, CA-based company’s shares have gained 8.3% in a year’s time against the industrys 3.2% drop. Also, an expected long-term earnings growth rate of 14.7%, ahead of the industry’s 11.9%, looks encouraging. Encouragingly, the Zacks Consensus Estimate for Grocery Outlet’s 2021 sales is pegged at $3.27 billion, which suggests growth of about 5.2% year over year. The VGM Score of B further speaks of the inherent potential of this Zacks Rank #3 (Hold) stock.

Don’t Miss These Solid Bets

B&G Foods (BGS - Free Report) has delivered an earnings surprise of 9.3% in the past four quarters, on average. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nomad Foods (NOMD - Free Report) has delivered an earnings surprise of 10.2% in the past four quarters, on average. It carries a Zacks Rank #2 (Buy).

Hain Celestial (HAIN - Free Report) , also a Zacks Rank #2 stock, delivered an earnings surprise of 24.6% in the past four quarters, on average.

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