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Rising interest rate hike worries have once again gripped markets as the Fed continues with its struggle to ease inflation, which is at multi-decade highs. Although wholesale prices slightly declined in February, consumers are spending cautiously.
It is quite difficult to cut down on basic necessities such as food and fuel. Hence, despite soaring commodity prices and declining retail sales, grocery sales have been steadily rising. Given this situation, stocks like The Hershey Company (HSY - Free Report) , Post Holdings, Inc. (POST - Free Report) , General Mills, Inc. (GIS - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) are likely to benefit in the near term.
Grocery Sales Jump
E-commerce has been playing a key role in driving overall retail sales. The pandemic saw millions shopping online for grocery, and the trend has continued. According to the monthly Brick Meets Click/Mercatus Grocery Shopping Survey, online grocery sales rose 1.5% year over year in February to $8.8 billion.
The year-over-year growth was primarily driven by an impressive 5% jump in monthly active users. The user base has now increased for two years in a row, with a 10% increase between February 2021 and February 2022.
According to the survey, more American households utilized just one of the three available delivery options for online orders in February, up roughly 8% from the previous month.
Pickup and Delivery rose 5% in February on a year-over-year basis, while Ship-to-Home increased 14%.
This came as the Commerce Department reported on Mar 15 that retail sales declined slightly by 0.4% in February. The retail sector has been suffering a lot owing to soaring commodity prices, which has seen people aggressively cutting down on spending.
However, grocery remains the bright spot given that there is little scope for cutting down spending on necessities like food items. Groceries are basic necessities and fall under the consumer staples sector.
The consumer staples sector is fundamentally strong and mature as demand is often resilient to changes in the economic cycle. Companies in this sector primarily sell everyday items and are hence defensive in nature.
The Consumer Staples Select Sector SPDR (XLP) has gained 2% over the past six months compared to the S&P 500 Index’s decline of 0.2% over the same period.
The jump in online grocery sales came as the latest data released by the Labor Department on Mar 15 showed that wholesale prices declined in February. The producer price index fell 0.1% in February against economists’ expectations of a rise of 0.3%. This is an indication that prices may finally have started cooling, which bodes well for the grocery segment.
Our Choices
Given this situation, it would be wise to invest in four food and grocery stocks mentioned below. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hershey Company is the largest chocolate manufacturer in North America as well as a global leader in chocolate and non-chocolate confectionery. Additionally, The Hershey Company manufactures pantry items like baking ingredients, toppings and beverages; and gum and mint refreshment products; snack bites and mixes, as well as spreads.
The Hershey Company’s expected earnings growth rate for the current year is 10.2%. The Zacks Consensus Estimate for the current-year earnings has improved 4.7% over the past 60 days. HSY has a Zacks Rank #2.
Post Holdings, Inc. is a consumer-packaged goods holding company. POST is involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. Post Holdings also engages in the private brand food category.
Post Holdings’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 37.6% over the past 60 days. POST presently sports a Zacks Rank #1.
General Mills, Inc. is a global manufacturer and marketer of branded consumer foods sold through retail stores. The company also serves the foodservice and commercial baking industries. General Mills’ principal product categories include ready-to-eat cereals, convenient meals, snacks (including grain, fruit and savory snacks, nutrition bars, and frozen hot snacks), super-premium ice creams as well as baking mixes and ingredients.
General Mills’ expected earnings growth rate for the current year is 6.1%. The Zacks Consensus Estimate for GIS’current-year earnings has improved 1.5% over the past 60 days. GIS currently carries a Zacks Rank #2.
Lamb Weston Holdings, Inc. is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers. LW, along with its joint venture allies, is the top frozen potato products supplier in North America, while it also operates internationally, with a robust and growing presence in emerging markets.
Lamb Weston’s expected earnings growth rate for the current year is 89.9%. The Zacks Consensus Estimate for the current-year earnings has improved 5.9% over the past 60 days. LW presently carries a Zacks Rank #2.
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4 Grocery Stocks to Buy on Soaring Online Sales
Rising interest rate hike worries have once again gripped markets as the Fed continues with its struggle to ease inflation, which is at multi-decade highs. Although wholesale prices slightly declined in February, consumers are spending cautiously.
It is quite difficult to cut down on basic necessities such as food and fuel. Hence, despite soaring commodity prices and declining retail sales, grocery sales have been steadily rising. Given this situation, stocks like The Hershey Company (HSY - Free Report) , Post Holdings, Inc. (POST - Free Report) , General Mills, Inc. (GIS - Free Report) and Lamb Weston Holdings, Inc. (LW - Free Report) are likely to benefit in the near term.
Grocery Sales Jump
E-commerce has been playing a key role in driving overall retail sales. The pandemic saw millions shopping online for grocery, and the trend has continued. According to the monthly Brick Meets Click/Mercatus Grocery Shopping Survey, online grocery sales rose 1.5% year over year in February to $8.8 billion.
The year-over-year growth was primarily driven by an impressive 5% jump in monthly active users. The user base has now increased for two years in a row, with a 10% increase between February 2021 and February 2022.
According to the survey, more American households utilized just one of the three available delivery options for online orders in February, up roughly 8% from the previous month.
Pickup and Delivery rose 5% in February on a year-over-year basis, while Ship-to-Home increased 14%.
This came as the Commerce Department reported on Mar 15 that retail sales declined slightly by 0.4% in February. The retail sector has been suffering a lot owing to soaring commodity prices, which has seen people aggressively cutting down on spending.
However, grocery remains the bright spot given that there is little scope for cutting down spending on necessities like food items. Groceries are basic necessities and fall under the consumer staples sector.
The consumer staples sector is fundamentally strong and mature as demand is often resilient to changes in the economic cycle. Companies in this sector primarily sell everyday items and are hence defensive in nature.
The Consumer Staples Select Sector SPDR (XLP) has gained 2% over the past six months compared to the S&P 500 Index’s decline of 0.2% over the same period.
The jump in online grocery sales came as the latest data released by the Labor Department on Mar 15 showed that wholesale prices declined in February. The producer price index fell 0.1% in February against economists’ expectations of a rise of 0.3%. This is an indication that prices may finally have started cooling, which bodes well for the grocery segment.
Our Choices
Given this situation, it would be wise to invest in four food and grocery stocks mentioned below. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hershey Company is the largest chocolate manufacturer in North America as well as a global leader in chocolate and non-chocolate confectionery. Additionally, The Hershey Company manufactures pantry items like baking ingredients, toppings and beverages; and gum and mint refreshment products; snack bites and mixes, as well as spreads.
The Hershey Company’s expected earnings growth rate for the current year is 10.2%. The Zacks Consensus Estimate for the current-year earnings has improved 4.7% over the past 60 days. HSY has a Zacks Rank #2.
Post Holdings, Inc. is a consumer-packaged goods holding company. POST is involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. Post Holdings also engages in the private brand food category.
Post Holdings’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 37.6% over the past 60 days. POST presently sports a Zacks Rank #1.
General Mills, Inc. is a global manufacturer and marketer of branded consumer foods sold through retail stores. The company also serves the foodservice and commercial baking industries. General Mills’ principal product categories include ready-to-eat cereals, convenient meals, snacks (including grain, fruit and savory snacks, nutrition bars, and frozen hot snacks), super-premium ice creams as well as baking mixes and ingredients.
General Mills’ expected earnings growth rate for the current year is 6.1%. The Zacks Consensus Estimate for GIS’current-year earnings has improved 1.5% over the past 60 days. GIS currently carries a Zacks Rank #2.
Lamb Weston Holdings, Inc. is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers. LW, along with its joint venture allies, is the top frozen potato products supplier in North America, while it also operates internationally, with a robust and growing presence in emerging markets.
Lamb Weston’s expected earnings growth rate for the current year is 89.9%. The Zacks Consensus Estimate for the current-year earnings has improved 5.9% over the past 60 days. LW presently carries a Zacks Rank #2.