Investor psychology and ensuing actions are inherently risk-averse amidst economic troughs.  While plenty of money is moving out of comparably risky investments, an abundance of cash is flowing directly into safe havens such as grocery store stocks.  After all, everyone needs to eat.

Though the masses cannot yet spend their Trump Bucks at sporting events, casinos and amusement parks, they can certainly spend at the grocery store.  The likes of GO, DG, APRN and IMKTA are likely to benefit from the significant uptick in consumer spending at grocery stores.

Dollar General (DG - Get Rating)

There has been a growing backlash against the ubiquity of dollar stores throughout the United States – at least up until the coronavirus outbreak, that is.  Community leaders far and wide started to turn against the likes of DG this past year only to backtrack on those positions after COVID-19 decimated our once-burgeoning economy.  As a result, the likes of DG are now being embraced for providing affordable goods without supply chain interruptions that have plagued so many other merchants amidst the pandemic.

DG is a superstar in the POWR Ratings, putting up A grades across the board, from Trade Grade to Industry Rank and beyond.  DG’s 5-year, 1-year and 3-month charts are a sight for sore eyes.  The stock traded at $80 in 2015 and has steadily increased to $174.

Consumers will continue to flock to DG stores, most of which are conveniently located within a short drive from the majority of America’s suburbs and city centers.  Look for DG to break through its 52-week high of $183.95 by summer’s end.

Grocery Outlet Holding (GO - Get Rating)

Times are tough.  Instead of paying extra for a tasty steak or delicious seafood, consumers are more inclined to conserve their limited spending power, shelling out Trump Bucks and what’s left of their personal savings for cheap food.  This behavior plays right into GO’s wheelhouse.

This discount grocer makes grocery shopping affordable for the masses.  GO specializes in general grocery items, dairy, deli, produce, beer and wine – all the essentials the typical consumer needs during and beyond the COVID-19 pandemic.

GO stands a good chance of moving toward TipRanks’ average analyst price target of $39 or possibly blowing right through this target in the weeks and months to come. Furthermore, GO is one of only six stocks selected for the Reitmeister Total Return portfolio, making it that much more of an attractive investment.

Blue Apron Holdings (APRN)

If you are like most others, you are tired of DIY shopping and cooking amidst the stay-at-home order.  Wouldn’t it be nice if ready-to-cook meals were delivered directly to your door?  Such convenience is APRN’s specialty.

APRN soared from $2.31 to $16.25 in less than a week’s time this March as business skyrocketed following the coronavirus outbreak.  A considerable portion of APRN’s new customers are likely to stick with the meal delivery service after nationwide stay-at-home orders are lifted, helping the stock move beyond its 52-week high of $19.49.

Though the company recently reported a quarterly loss of $20 million, APRN second-quarter revenue will undoubtedly be quite impressive after the influx of new customers amidst the pandemic.  Even if APRN does not move from the red into the black in the next couple quarters, this stock has solid long-term potential, especially if social distancing becomes the norm for upwards of a year or two into the future.

Ingles Markets (IMKTA - Get Rating)

Most grocery store stocks are value stocks as opposed to growth stocks simply because there is minimal room for innovation.  This industry’s comparably low ceiling is certainly a turnoff for growth-oriented investors yet that is no excuse to completely ignore the sector.

IMKTA is an excellent example of a grocery store value stock with the potential to provide rock-solid returns across the long haul.  IMKTA operates in excess of 200 grocery stores throughout the Southern portion of the United States, selling exactly what the masses need: meat, dairy, produce and frozen food.

Though IMKTA is a regional business, it passes the POWR Ratings test with a B overall rating, shining particularly bright in the Trade Grade category.  Zacks concurs with this analysis, scoring IMKTA with As across the board from value to growth and momentum.

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DG shares were trading at $175.91 per share on Friday afternoon, up $2.31 (+1.33%). Year-to-date, DG has gained 13.26%, versus a -8.92% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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