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Coronavirus-Induced Stockpiling Boosts These 5 Retailers

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The coronavirus pandemic has put major cities under lockdown and infected more than 384,432 people across the globe. With fatalities rising and a cure yet to be found, cities have been forced to go under lockdown. The resultant panic is driving people to stockpile essential goods like bathroom tissue, canned foods, bottled drinking water and hand sanitizers.

More than 46,148 people have been impacted in the United States so far and with community transmission gaining scale, people are hoarding essentials so that they do not have to venture out for daily supplies. This bodes well for supermarket, grocery stores and discount store chains.

Stockpiling Aids Supermarkets and Grocery Stores

From bread, milk, meat to toilet paper, everything has been wiped out by customers, leaving shelves empty. This rapid dramatic shift in consumer behavior has temporarily disrupted the market, straining the supply side.

 

However, retailers and grocers have been able to keep up with demand so far. With demand still moving northward, higher sales could translate into better-than-expected earnings in the first quarter for some retailers. Additionally, the coronavirus fear has led to an economic downturn that pushed people to change spending habits. For instance, there is no scope for people to dine out and they are instead spending on buying grocery. Evidently, the current stockpiling is boosting the recession-resistant consumer staple sector and in turn helping several retailers rally.

What’s more? Some retailers have begun hiring people on a full-time, part-time and temporary basis. E-commerce giant, Amazon.com, Inc. AMZN is set to hire 100,000 new workers to meet demand across fulfillment and distribution centers. Additionally, Dollar Tree, Inc. DLTR said it will be hiring 25,000 full and part-time workers for its chains and distribution centers across the United States.

In fact, private companies like grocery delivery giant Instacart said that it will be hiring 300,000 contractual workers to keep up with rising demand over the next three months.

5 Stocks to Watch

As situation across the globe worsens and governments promote quarantines, social distancing, and remote work options to slowdown the spread of COVID-19, demand for essential services like grocery stores, health and hygiene products are bound to keep increasing.

Instacart has reported more than 150% rise in order volume in the recent weeks. Given the current developments, we have shortlisted five retailers that are sure to benefit from the soaring demand.

The first one on our list is Costco Wholesale Corporation COST, a provider of dry and packaged foods, and groceries. This Zacks Rank #2 (Buy) company’s expected earnings growth rate for the current year is 6.5% against the Zacks Retail - Discount Stores industry’s projected earnings decline of 0.9%.

The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.3% upward over the past 60 days. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Next we have an operator of convenience stores, Casey's General Stores, Inc. CASY. This Zacks Rank #2 company’s expected earnings growth rate for the current quarter is 38.2% compared with the Zacks Retail - Convenience Stores industry’s projected earnings growth of 9.5%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.1% upward over the past 60 days.

Supermarkets, multi-department stores, marketplace stores, and price impact warehouse stores chain operator, The Kroger Co. KR also makes it to our list. The company’s expected earnings growth rate for the current quarter is 5.6% against the Zacks Retail - Supermarkets industry’s projected earnings decline of 25.7%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 0.9% upward over the past 60 days. Kroger carries a Zacks Rank #3 (Hold).

Next one on our list isgeneral merchandise retailer, Target Corporation TGT. The company’s expected earnings growth rate for the current year is 7% against the Zacks Retail - Discount Stores industry’s projected earnings decline of 0.9%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.3% upward over the past 60 days. Target carries a Zacks Rank #3.

Finally, we have Dollar General Corporation DG. The company’s expected earnings growth rate for the current year is 10.7% against the Zacks Retail - Discount Stores industry’s projected earnings decline of 0.9%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 0.3% upward over the past 60 days. Dollar General carries a Zacks Rank #3.

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