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Online Grocery Sales Jump in January: 4 Solid Stocks to Buy

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Online grocery sales hit a whopping $9.3 billion in January, jumping 15% from November 2020, as millions continued to rely on e-commerce amid the pandemic, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey. The COVID-19 pandemic has left the retail sector battered but e-commerce has been breathing life into it.

Moreover, the pandemic has also changed the way that people have been shopping so far. An increasing number of people are now shopping online, particularly necessities like groceries, which is helping the segment. Also, retailers have been enhancing their delivery and pick-up services, thus making online purchase even more convenient.

Online Grocery Sales Jump

An increasing number of people have been relying on e-commerce, which is driving grocery sales. The impressive jump in January comes as 69.7 million households ordered groceries online, with an average of 2.8 orders across delivery, pick-up and ship-to-home, according to the Brick Meets Click/Mercatus Grocery Shopping Survey.

January also saw a 16% increase from November in the number of households buying groceries online. The delivery and pick-up segment generated $7.1 billion in sales, accounting for 77% of the overall online spend on groceries in January versus 64% in November. 

Online Grocery Sales Poised for Further Growth

The pandemic saw people changing their shopping habits. Millions of Americans have been shopping online on fears of contracting the coronavirus, which has been helping not only grocery sales but the overall retail sector. Moreover, the coronavirus fears are far from over as a result of which people have been time and again stockpiling on necessary goods, which is helping grocers earn more revenues.

U.S. retail sales jumped a solid 5.3% in January on a month-over-month basis to hit a seven-month high, the Commerce Department said on Feb 17. The solid performance comes just a month after Congress approved a fiscal stimulus totaling $900 billion.

Also, grocers are increasingly shifting focus to pick-up and delivery facilities as people are hesitating to step out of their houses. According to eMarketer, online grocery sales are projected to reach 147.4 million by 2023.

Our Choices

E-commerce has been breathing life into the retail sector ever since the COVID-19 outbreak, which has been helping the grocery segment. Moreover, the fresh round of stimulus will give people more purchasing power, which they are likely to use in buying groceries given that it’s one of the essential commodities. This thus makes for an opportune time to invest in grocery companies that have a strong online arm.

Target Corporation (TGT - Free Report) 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 43.8%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. Target carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Hain Celestial Group, Inc. (HAIN - Free Report) 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 63.1%. The Zacks Consensus Estimate for current-year earnings has improved 7.9% over the past 60 days. The Hain Celestial Group holds a Zacks Rank #2.

Celsius Holdings Inc. (CELH - Free Report) specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements.

The company’s expected earnings growth rate for next year is 16.7%. The Zacks Consensus Estimate for current-year earnings has improved 20% over the past 60 days. Celsius Holdings carries a Zacks Rank #2.

Mondelez International, Inc. (MDLZ - Free Report) makes snack food products. Its product categories include chocolates; biscuits (cookies, crackers and salted snacks); gum and candy, beverages and cheese & grocery products.

The company’s expected earnings growth rate for next year is 10.8%. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the past 60 days. Mondelez has a Zacks Rank #2.

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