Sprouts Farmers Market - Benefiting from Lockdown
Mar 12, 2020 by InvestorDestination Team
As countries around the globe are frantically trying to contain the spread of COVD-19, economic activities are coming to a screeching halt. Uncertainties and fear of recession are rattling the market. During extreme market volatility, it is better to stay on the sideline. However, during these times, the market does present some great bargain opportunities. According to us, the market volatility has put Sprouts Farmers Market's (NASDAQ: SFM) stock on sale.
To control the spread of COVD-19, the US is enforcing social distancing. Retailers and entertainment services are shutting their doors, restaurants are offering take-out only options, and airlines have halted services. As everyone is confined to their homes, consumers are spending more on grocery shopping.
During this lockdown, consumers prefer online grocery shopping. Sprouts Farmers Market does offer online shopping and grocery delivery service through instacart. Now, as unemployment is rising, cost-conscious consumers might prefer cost-effective online grocery shopping via click and collect instead of instacart. However, the company abandoned its click and collect service, and because of that, it might lose some sales.
The company offers affordable fresh, natural, and organic products. While no one can predict the extent to which the US economy will decline, this yea it will certainly decline Sprouts Farmer Market’s value proposition will resonate with consumers even during an economic downturn. During a recession, its affordable offerings might help the company attract customers from competitors.
Considering all these factors, we believe it is a buy.
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