Apr 8, 2020
While many businesses suffer during COVID-19, these ones could see gains
By Andrew Bell
One of the most fascinating questions for investors is how consumer behaviour will be changed by the COVID-19 outbreak. Two types of businesses that could see gains are home delivery of meal kits and selling gardening equipment.
Montreal-based Goodfood Market Corp., which delivers pre-measured meal ingredients and groceries, said Wednesday it has “experienced greater demand” during the COVID-19 crisis and “we expect the pandemic to have a positive impact on revenues, with increased subscriber growth, order rates and average order values.”
However, the company also cautioned that it expects “operations to be impacted by staffing and supply challenges also caused by the pandemic.”
Desjardins analyst Frederic Tremblay, who rates Goodfood shares a Buy, said in a report that “the longer the COVID-19 crisis lasts, the more likely it is that consumer habits change permanently. Overall, we expect that COVID-19 will accelerate the adoption of online grocery.”
Revenue in Goodfood’s latest quarter rose 61 per cent to $58.8 million and active subscribers were 246,000 as of February 29, up 55 per cent in a year. The company said the outbreak had “no impact” on those results but will improve performance in the current three months. Goodfood shares are up 72 per cent in the past month.
South of the border, Blue Apron Holdings Inc. said last month it had experienced a “sharp increase” in demand for meal kits. The company’s shares have soared 340 per cent in the past month although they’re still down about 26 per cent in a year.
As millions eat at home, Raymond James sees another post-virus trend: Spending more time in the garden.
In a report headed "This Is The Year of the Backyard," analyst Matthew McClintock predicts upside for Tractor Supply, the largest U.S. operator of retail farm and ranch stores,.
He detects a “nesting factor” as families cultivate homegrown food. Meanwhile, McClintock says, working from home creates more opportunity to spend time outside and lower incomes will oblige consumers to take on projects themselves, including fencing or building a chicken coop.
Tractor Supply shares are up nine per cent over the past month.
