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3 Stocks Tapping the Potential of Pickup and Delivery Trends

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The pandemic has triggered widespread adoption of ordering groceries and other essential products online. This, in turn, is spurring demand for home delivery and pickup services across the retail and food services industry. Although the crisis is now somewhat under control and states have begun to slowly open their economies, the new digital trend is likely to prevail at least in the foreseeable future.

This is because social distancing protocols would still be followed at large, despite the gradual withdrawal of strict stay-at-home measures. Let us thus take a look at some of the stocks that have benefited from the rapid adoption of these trends so far and are likely to do so ahead.

Social Distancing Norms Fit Pickup and Delivery Services

According to Doug McMillon, CEO of Walmart Inc. (WMT - Free Report) , delivery and pickup services will become the "new normal" as the retail industry undergoes considerable change due to the pandemic.

After all, home delivery and pickup services offer greater ease and convenience to shoppers. More importantly, these are quite helpful in maintaining social distancing measures. Of course, these services are not new in the arena. Pickup and delivery of products have been around for a while but the pandemic has highlighted the effectiveness of these services both for consumers and retailers.

In addition, retailers have modified these services to offer more flexibility and ease to their customers. The services now come with contactless delivery, low-contact pickup and cashless payments in a bid to reduce intractability with the general public.

3 Stocks Riding the Trend

We have handpicked three stocks that have aligned their business operations in accordance with social distancing norms and are benefiting from the changes. One could consider investing in these companies for gains ahead.

Sprouts Farmers Market, Inc. (SFM - Free Report) is offering grocery delivery and pickup to all specialty grocers’ major markets via Instacart — a delivery service available to more than 85% of American households. Sprouts Farmers Market expects to cover more than 340 of its stores by this month. 

Sprouts Farmers Market’s expected earnings growth rate for the current year is 16%. The Zacks Consensus Estimate for the company’s current-year earnings has moved 13.3% north in the past 60 days. Sprouts Farmers Market carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Sprouts Farmers Market, which belongs to the Zacks Food - Natural Foods Products industry, have gained 25.3% so far this year compared to the industry’s decline of 28.5%.

Cincinnati-based The Kroger Co. (KR - Free Report) has witnessed a surge in demand for groceries and essential products over the past few months as more people are now cooking meals at home instead of eating out. The company has added an array of services such as contactless deliveries, contactless payment options such as Kroger Pay, and low-contact pickups to fight the pandemic.

Kroger’s expected earnings growth rate for the current year is 12.3%. The Zacks Consensus Estimate for the company’s current-year earnings has moved 5.1% north in the past 60 days. Kroger carries a Zacks Rank #2 (Buy). Shares of Kroger, which belongs to the Zacks Retail - Supermarkets industry, have gained 12.7% so far this year compared to the industry’s rise of 3.9%.

Domino's Pizza, Inc. (DPZ - Free Report) managed to adapt its business to the pandemic-triggered lockdown very well. In fact, the company is running its services rather smoothly with its contactless delivery and pickup services.

Domino's Pizza’s expected earnings growth rate for the current year is 14.2%. The Zacks Consensus Estimate for the company’s current-year earnings has moved 0.4% north in the past 60 days. Domino's Pizza carries a Zacks Rank #2. Shares of Domino's Pizza, which belongs to the Zacks Retail - Restaurants industry, have gained 25% so far this year compared to the industry’s decline of 11.5%.

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Dominos Pizza Inc (DPZ) - free report >>

Walmart Inc. (WMT) - free report >>

The Kroger Co. (KR) - free report >>

Sprouts Farmers Market, Inc. (SFM) - free report >>