Inflation has cooled as food prices have fallen significantly in recent months. Consumer spending on essentials was stable last month and online grocery sales have started to rise again.
According to the monthly Brick Meets Click/Mercatus Grocery Shopper Survey, online grocery sales totaled $7.9 billion in July, up 9.2% year over year.
Delivery sales rose a whopping 22% in July, thanks to ongoing promotional efforts. Home deliveries were also impressive, up 6%, while pickups remained stable year-on-year.
Major grocers are making greater efforts to expand their delivery services and offering deep discounts as part of their delivery programs, which is boosting online grocery sales.
The sharp rise in food sales comes on the back of a solid recovery in the retail sector in July. The Commerce Department said retail sales rose 1% in July after falling 0.2% in the previous month, beating analysts’ expectations for a 0.3% increase.
Although inflation remains a concern, it has fallen significantly, which is helping consumer spending. Moreover, food is a staple food and consumers cannot skimp on these staples.
The Federal Reserve is currently preparing to cut interest rates, with the first rate cut likely to come in September. Markets are pricing in a 50 basis point rate cut for September.
Lower interest rates allow consumers to spend more flexibly because the cost of borrowing is lower.
Given this situation, investing in food stocks with a strong online presence would be a wise decision.
Our selection
We narrowed our search to three food stocks: Vital Farms, Inc. (VITL – Free report), Pilgrim’s Pride Corporation (PPC – Free report) and Ingredion Incorporated (ING – Free report) that have great potential for 2024.
These stocks have seen positive earnings estimate revisions over the past 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 products include eggs in shell, 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 its current year earnings has improved 18.1% over the past 60 days. VITL currently has a Zacks Rank #2.
Pilgrim’s Pride Corporation is focusing on strengthening its prepared foods category. PPC has expanded its product mix in the organic category, including products that contain no antibiotics at all, to meet changing customer tastes.
Pilgrim’s Pride’s expected earnings growth rate for the current year is over 100%. The Zacks Consensus Estimate for its current year earnings has improved 12.7% over the past 60 days. PPC currently has a Zacks Rank #1.
Ingredion Incorporated is an ingredient solutions provider specializing in natural sweeteners, starches and food ingredients. INGR serves various industries in the food, beverage, brewing, pharmaceutical and other industries.
Ingredion’s expected earnings growth rate for the current year is 5.6%. The Zacks Consensus Estimate for its current year earnings has improved 2.6% over the past 60 days. INGR currently has a Zacks Rank of 2.
