Shares of online grocery retailer Ocado are unique in the U.K. stock market as being the only stock in the FTSE 100 to show again this year. In fact, despite dropping 3% on Thursday, the stock is now up 12.2% since the start of the year, versus the 31.7% drop in the FTSE 100.
The gains for the stock are a recognition by investors that demand for home delivery of grocery during the pandemic is going to increase, and perhaps exponentially. In addition to that, some are expecting a change in the long-term shopping habits of consumers in response to this coronavirus. With Ocado a leading global provider of technology for online grocery shopping this could be the start of a year’s long rally.
Online grocery demand has surged in response to coronavirus quarantine restrictions, and this has highlighted the fact that physical order picking is antiquated and inefficient in this technological age. Retailers are coming to see the need for automated fulfilment, and that’s where Ocado stands to benefit.
Ocado has shifted its focus in recent years to its warehouse robotics and automated fulfilment technology. Now it hopes to capitalize on this by licensing its technology to other online grocery stores and retailers.
Outperformance for Ocado’s stock is nothing new, with shares up 500% since 2017 as it has added several major global grocery players to its licensing deals. This includes Casino GuichardPerrachon in France, Kroger’s in the U.S., and Cole Group in Australia.
Recent data indicates the average transaction has grown by 25% since the coronavirus outbreak.