E-commerce Powering Retail Sales: 4 Stocks to Buy

The coronavirus pandemic has been one of the biggest drivers of e-commerce. When countries closed down borders and locked almost down everything, e-commerce came as a savior for billions, who shopped everything from groceries to food to other essential household goods online.

In fact, e-commerce was also responsible for saving the retail sector from taking a further beating during the two-month-long lockdown period. This has also made an increasing number of retailers and food companies stress more on strengthening their e-commerce arm.

Retailers Expanding E-Commerce Presence

Retailers like Walmart, Inc. WMT, Kroger Company KR and Target Corporation TGT are further expanding their e-commerce presence. Kroger recently said that it is expanding its Kroger Ship program to offer an extended ship-to-home assortment through a marketplace offering of third-party sellers powered by Miraki this fall.

Walmart, which is a leader in online grocery sales in the United States, is partnering with Instacart for same-day delivery. The service is currently in a pilot phase in four markets and will be rolled out across the country in due course.

Target’s overall e-commerce sales soared 141% in the first quarter. Moreover, online sales jumped from 33% in February to 282% in April, as more than five million customers shopped at target.com for the first time. Amazon.com, Inc.’s AMZN grocery e-commerce sales tripled in the second quarter, hitting $7.2 billion in June. In the past six months, Amazon has tripled its overall grocery delivery capacity and the total number of grocery pickup locations, it said in a press release.

Online Sales Surge On Click-And-Collect, Curbside Pickup

The lockdown saw more people relying on e-commerce for food, grocery and other essential items. Online shopping made its first appearance in the late '90s and early 2000s. However, it made a bumpy start particularly in the United States, with people still opting for brick-and-mortar stores.

However, this year is proving to be a game changer for e-commerce not only in the United States but also globally. COVID-19 has been a defining event for e-commerce, accelerating the adoption curve significantly. According to a new report by eMarketer, total U.S. retail sales are projected to decline 10.5% this year, with a 14% drop in brick-and-mortar sales. However, e-commerce is poised to grow 18% (following a 14.9% gain in 2019), which reflects a notable increase in both the number of digital buyers and the average spending per buyer.

Retailers too have realized that the sudden shift to online shopping is here to stay and are hence strengthening their e-commerce arm. Online sales have been driven by a surge in click-and-collect, specifically curbside pickup. According to the report, U.S. click-and-collect e-commerce sales are expected to be $58.52 billion, up 60.4% from its initial forecast of 38.6% growth.

Our Choices

The economy has started reopening but the government is still struggling to contain the spread of the pandemic. Safety measures like at-home orders and social distancing will exist for at least a few more months. Hence, more people will rely on online delivery, especially grocery and household staples. Given this situation, it might be prudent to invest in retail stocks that have a strong online presence.

Casey’s General Stores, Inc. CASY offers a variety of food selection (including freshly prepared foods such as pizza, donuts and sandwiches), beverages, tobacco and nicotine products, health and beauty aids, school supplies and houseware.

The company’s expected earnings growth rate for next year is 13.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. Casey’s holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Herbalife Ltd. HLF offers a range of science-based, weight-management products, nutritional supplements and personal care products intended to support weight loss and a healthy lifestyle.

The company’s expected earnings growth rate for the current year is 23.1%. The Zacks Consensus Estimate for current-year earnings has improved 21.8% over the past 60 days. Herbalife has a Zacks Rank #2 (Buy).

JD.com, Inc. JD through its website offers computers, mobile handsets and other digital products, home appliances, automobile accessories, clothing and shoes, luxury goods, furniture, and other household and personal care items.

The company’s expected earnings growth rate for the current year is 20.2%. The company’s shares have gained 22% over the past three months. JD.com carries a Zacks Rank #2.

Best Buy Co., Inc. BBY is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, health, security, appliances and related services.

The company’s expected earnings growth rate for next year is 16.5%. The Zacks Consensus Estimate for current-year earnings has improved 11.6% over the past 60 days Best Buy carries a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Click to get this free report Target Corporation (TGT) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report Best Buy Co., Inc. (BBY) : Free Stock Analysis Report The Kroger Co. (KR) : Free Stock Analysis Report Herbalife LTD. (HLF) : Free Stock Analysis Report Caseys General Stores, Inc. (CASY) : Free Stock Analysis Report JD.com, Inc. (JD) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research