Earlier this year, coronavirus-fueled panic purchases made supermarkets headlined. As a result of the pandemic, the food industry and online shopping have become increasingly important to people staying in their place. Citizens around the world have adapted their daily work and shopping habits to reflect the growing trend of staying at home.
While people have stockpiled food stocks, stocks of food companies have caught the attention of investors. Sales growth and improved margins have helped stock prices for many of these stocks, especially in the US, hold up well over the past six months. Many of them have even reached a new record of 52 weeks or even a record in recent weeks.
The food chain is home to a wide variety of companies, each of which plays a different but critical role in feeding billions worldwide. They include farms, farms, commodities, food manufacturers, distributors, supermarkets, restaurants and delivery services.
The pandemic has highlighted the role of these companies. Their management has responded to growing demand (from fresh groceries to comfort foods to healthier eating) and evolving consumption trends (such as ordering online or cooking more for the family).
Today we will discuss & # 39; several FTSE food and grocery stocks, also listed in the US, that may deserve your attention this fall.
Grocery Names in the FTSE 100
According to data from KANTAR, Tesco (LON :), (OTC 🙂 is the largest supermarket chain in the UK and one of the most valuable retail brands in the world.
Tesco is the largest of the four grocers included in the UK's leading stock index, both by market value and industry share. The others (in alphabetical order) are Morrisons Supermarkets (LON :), (OTC :), Ocado (LON :), and Sainsbury (LON :), (OTC :).
Year-to-date, the FTSE 100 is still down more than 20%. In this way, all four supermarkets in the index did better. This is how they have fared so far in 2020.
: a decrease of 12.1%
: Decreased 1.9%
: 95% higher
: Decreased 19.4%
Clearly Ocado has been the winner so far in 2020, followed by Morrisons.
Our readers in the UK will be familiar with the fact that Ocado is an online grocery store. It works without physical stores. All the others have physical outlets in every corner of the country.
In fact, many consider Ocado more of a technology company than a supermarket. The IPO took place in July 2010. Since then, OCDO shares have risen by about 1,500%. In other words, £ 1,000 (US $ 1,328) initially invested in the business would now be worth around £ 16,000 (US $ 21,250).
We expect Ocado stock to continue to deliver value to shareholders in the new decade. As a fast-growing name, it has never paid dividends.
Beginning September 1, Ocado will enter into a new partnership with Marks & Spencer Group (LON :), (OTC :), whereby M&S Food products will be available for delivery by Ocado. M&S replaces Waitrose in the Ocado supply chain.
Marks & Spencer, whose history dates back to 1884, also sells general merchandise such as clothing, beauty and personal care products, and home accessories. This new partnership may benefit MKS shares, which are included in the UK junior index. This year, the stock has fallen by more than 47% so far. With a forward P / E of 20.92 and a P / S of 0.21, contrarian investors can start to find value in MKS.
In March, Marks and Spencer cut its dividend.
Should investors buy other UK supermarkets?
Those investors looking for passive dividend income may want to do further research and stocks. Their respective dividend yields are 4.1% and 3.5%. In April, however, Sainsbury put his dividend on hold.
Market participants may also be interested to know that Morrisons and Amazon (NASDAQ 🙂 have had a partnership in the UK since 2016. Morrisons at Amazon's grocery delivery service runs on Amazon's Prime Now platform & # 39; . Their partnership has grown in recent months, with many investors wondering if Amazon could acquire Morrisons.
While mentioning Amazon, we would like to remind readers that Asda, the country's third largest grocery store, is in the UK under the control of US-based Walmart (NYSE :), & # 39; the world's largest company by revenue.
As 2020 has changed priorities for many people, it has also led to the development of investment portfolios. Investors interested in supermarkets in the UK can access a variety of names. In addition, they may consider buying shares in companies like Amazon or Walmart, whose overseas business is also significant.
Finally, shares of AMZN and WMT have risen more than 85% and 15% respectively since the beginning of the year.
