Grocery stores stocks are winners during COVID-19 Pandemic
Certainly one sector that benefited from the COVID-19 pandemic is the Grocery stores sector. The COVID-19 stay at home orders throughout the country forced many non-essential businesses to close temporarily or even permanently, including restaurants. Grocery stores on the other hand, remained open as they are considered essential businesses.
The closure of restaurants increased demand for grocery stores items as people are forced to cook and eat at home. This and combined with lower gas prices should increase the profitability of Grocery stores companies and therefore increase earnings per share.
Grocery stores rely heavily on transportation and specially ground transportation. This is a big portion of their expenses. With gas prices declining, this will help Grocery stores in saving lots of money on transportation cost.
Some of these Grocery stores companies are, United Natural Foods, Inc. [stock_quote symbol=”UNFI”], Grocery Outlet Holding Corp. [stock_quote symbol=”GO”], and Walmart Inc. [stock_quote symbol=”WMT”]
As of June 23rd 2020, UNFI Year to Date performance is around 48% on the positive side, while GO appreciated about 25% and WMT appreciated about 1.7% not including dividends.
They shall continue to do well in my opinion. Re-opining the country is taking longer than anticipated and gas remains cheap.