High commodity prices and higher borrowing costs have compelled people to cut down on spending. This has been severely impacting the manufacturing sector, which has been shrinking as demand is drying up. Also, the retail sector has been suffering as consumers are spending cautiously.
However, it is almost impossible to cut down on spending on basic necessities like daily-need items and groceries. This has seen online grocery sales grow steadily amid inflationary pressures. Groceries belong to the consumer staples sector, and investing in such stocks is safe during this time of economic uncertainty.
Online Grocery Sales Grow
According to the latest Brick Meets Click/Mercatus Shopping Survey, online grocery sales increased 1% year over year in April. Online grocery sales totaled $8.2 billion. The jump comes despite a decline in pickup and ship-to-home sales.
Pickup declined 3%, while ship-to-home sales dropped 19%. However, delivery sales soared 20% in April.
The gains in delivery sales in April were driven by a solid jump in monthly active users and higher average order value (AOV).
This means an increasing number of people are opting to buy groceries online. At the same time, demand is still high, which is boosting orders. AOV rose 5% year over year in April.
Another reason for the jump in April is a low unemployment rate and steady growth in wages. Higher wages are helping consumers with more purchasing power. Also, solid job additions to the economy in April helped boost grocery sales. The U.S. economy added 253,000 jobs in April.
Inflation, although at a multi-year high, showed signs of easing in April. The consumer price index (CPI) showed that consumer prices rose 4.9% year over year in April compared to 5% in March. This is the lowest annual rate since April 2021.
Given this situation, it would be ideal to invest in grocery stocks with a strong online presence. Also, groceries belong to the consumer staples sector, which is defensive in nature. These stocks are fundamentally sound given that consumer demand for staples like groceries typically remains resilient to wild swings in the economic cycle.
Given this situation, it would be wise to invest in these four food and grocery stocks. 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. Conagra Brands, Inc. ( CAG Quick Quote CAG - Free Report) is one of the leading branded food companies in North America. CAG offers premium edible products, with a refined focus on innovation. Conagra Brands maintains a highly dynamic product portfolio and incorporates alterations within it as per the preference pattern of its end users.
Conagra Brands’ expected earnings growth rate for the current year is 17%. The Zacks Consensus Estimate for its current-year earnings has improved 3.8% over the past 60 days. CAG currently sports a Zacks Rank #1.
The Kraft Heinz Company ( KHC Quick Quote KHC - Free Report) is one of the largest consumer packaged food and beverage companies in North America. KHC manufactures and markets food and beverage products like condiments and sauces, cheese as well as dairy, meals, meats, refreshment beverages, coffee, and other grocery products.
The Kraft Heinz Company’s expected earnings growth rate for the current year is 3.6%. The Zacks Consensus Estimate for its current-year earnings has improved 6.3% over the past 60 days. Presently, KHC has a Zacks Rank #2.
Lamb Weston Holdings, Inc. ( LW Quick Quote LW - Free Report) 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 more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 15.3% over the past 60 days. LW currently has a Zacks Rank #1.
McCormick & Company, Incorporated ( MKC Quick Quote MKC - Free Report) is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry across the entire globe. MKC’s key sales, distribution and production facilities are located in North America and Europe.
McCormick & Company’s expected earnings growth rate for the current year is 3.2%. The Zacks Consensus Estimate for the current-year earnings has improved 1.6% over the past 60 days. MKC carries a Zacks Rank #2.