The retail sector has struggled a lot lately but has still managed to hold its ground amid growing inflationary pressures. Consumers have cut down on discretionary items as high prices continue to pinch their pockets. However, spending on groceries, which is a necessity, has been growing steadily.
Retail sales saw growth in February, largely driven by online sales. Online grocery sales also grew in February after witnessing a solid jump in 2024. Given this situation, investing in grocery stocks with a strong online presence would be a prudent choice.
We have narrowed our search to three grocery stocks, namely, Beyond Meat, Inc. BYND, United Natural Foods, Inc. UNFI and Utz Brands, Inc. UTZ, which have strong potential for 2025.
These stocks have seen positive earnings estimate revisions in the last 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.
Online Grocery Sales on the Rise
Online grocery sales grew a robust 31%, totaling $10.3 billion in February from the year-ago levels of $7.9 billion, according to the monthly Brick Meets Click and Mercatus Grocery Shopping Survey. This was also the third time that online grocery sales reached more than $10 billion in a month and the second-highest online grocery sales ever recorded in the United States.
February’s jump follows a 16.6% year-over-year increase in online grocery sales. Moreover, this was the seventh straight month that online grocery sales totaled more than $9.5 billion.
The Delivery segment led online grocery sales in February. Its sales surged 45% from $3.1 billion a year ago to $4.5 billion for the month. The growth was primarily driven by a rise in monthly active users (MAUs).
Online Shopping Preferred Choice
The solid start to this year follows a stellar 2024, which saw online grocery sales jumping 19% year over year in December. Overall, online grocery sales increased 18% in the second half of 2024 after a slow start to the year.
An increasing number of consumers are buying groceries online, as it has become a preferred mode since the pandemic. High prices have been posing a challenge for millions of Americans, with major sectors suffering for months.
However, groceries, which are part of the broader consumer staples sector, have defied the odds. Groceries are necessities, and it is almost impossible to cut down on everyday items. This has also been helping the broader retail sector. In February, retail sales grew 0.2% sequentially and 3.1% from the year-ago levels. Online retail sales rose 3.1% month over month in February.
President Donald Trump’s proposed tariffs plan have also been weighing on consumers’ sentiment but that hasn’t deterred them from spending on groceries.
3 Grocery Stocks With Upside
Beyond Meat
Beyond Meat, Inc. manufactures, markets and sells plant-based meat products primarily in the United States and internationally. BYND sells its products under the Beyond Beef, Beyond Chicken, The Beyond Burger, Beyond Meat, Beyond Sausage, Eat What You Love and The Cookout Classic brand names.
Beyond Meat’s expected earnings growth rate for the current year is 31.6%. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the past 60 days. BYND presently carries a Zacks Rank #2.
United Natural Foods
United Natural Foods, Inc. is the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada. UNFI offers approximately 250,000 products, consisting of national, regional and private label brands, grouped into the following main product categories — grocery and general merchandise; perishables; frozen foods; wellness and personal care items; and bulk and foodservice products.
United Natural Foods’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 7.9% over the past 60 days. UNFI currently has a Zacks Rank #2.
Utz Brands
Utz Brands, Inc. manufactures a diverse portfolio of salty snacks under popular brands, including Utz, TORTIYAHS!, Zapp's, Golden Flake, Good Health, Boulder Canyon and Hawaiian Brand. UTZ, formerly known as Collier Creek, is based in New York.
Utz Brands has an expected earnings growth rate of 10.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the last 60 days. UTZ currently carries a Zacks Rank #2.
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United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Beyond Meat, Inc. (BYND): Free Stock Analysis Report Utz Brands, Inc. (UTZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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