Inflation has been cooling as food prices have eased substantially over the past few months. Consumer spending on necessities showed resilience last month, with online grocery sales ticking up again.

According to the monthly Brick Meets Click/Mercatus Grocery Shopper Survey, online grocery sales in July totaled $7.9 billion, climbing 9.2% year over year.  

Delivery sales jumped a whopping 22% in July, driven by continued promotional efforts. Ship-to-home also came in impressive, increasing 6%, while pickup remained steady year over year.

Major grocery retailers are putting in more effort to strengthen their delivery arm and offering solid discounts on their delivery programs, which has been boosting online grocery sales.

The solid jump in grocery sales comes as the overall retail sector staged a solid rebound in July. The Commerce Department said that retail sales gained 1% in July after declining 0.2% in the prior month and beating analysts’ expectation of a rise 0.3%.

Although inflation remains a concern, it has declined substantially, aiding consumer spending. Moreover, groceries are essentials and consumers can’t cut down on spending on staples.

The Federal Reserve is now gearing up to cut rates, with the first rate cut likely coming in September. Markets are pricing in a 50-basis point rate cut in September.

Lower interest rates will allow consumers to spend more freely as it will ease borrowing costs.

Given this situation, investing in grocery stocks with a strong online presence would be a wise decision.

Our Picks

We have narrowed our search to three grocery stocks such as Vital Farms, Inc. (VITL Quick QuoteVITL - Free Report) , Pilgrim's Pride Corporation (PPC Quick QuotePPC - Free Report) and Ingredion Incorporated (INGR Quick QuoteINGR - Free Report) that have strong potential for 2024.

These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vital Farms, Inc. offers a range of produced pasture-raised foods. VITL’s products, including shell eggs, butter, hard-boiled eggs, ghee and liquid whole eggs.

Vital Farms’ expected earnings growth rate for the current year is 88.1%. The Zacks Consensus Estimate for current-year earnings has improved 18.1% over the past 60 days. VITL presently carries a Zacks Rank #2.

Pilgrim's Pride Corporation is focusing on strengthening its Prepared Foods category. PPC has been increasing its product mix for organic category, including No-Antibiotics-Ever products, to cater to customers' evolving tastes.

Pilgrim's Pride’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 12.7% over the past 60 days. PPC currently sports a Zacks Rank #1.

Ingredion Incorporated is an ingredients solutions provider, specializing in nature-based sweeteners, starches and nutrition ingredients. INGR serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries.

Ingredion’s expected earnings growth rate for the current year is 5.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. INGR currently has a Zacks Rank #2.