Will Ocado Group PLC’s Stock Price Rise Faster Than J Sainsbury plc, Tesco PLC, WM Morrison Supermarkets PLC And ASOS plc After Trading Statement?

Does Ocado Group PLC’s (LON:OCDO) (LSE:OCDO.L) stock price have more investment appeal than J Sainsbury plc (LON:SBRY) (LSE:SBRY.L), Tesco PLC (LON:TSCO) (LSE:TSCO.L), WM Morrison Supermarkets PLC (LON:MRW) (LSE:MRW.L) and ASOS plc (LON:ASC) (LSE:ASC.L)?

Ocado Group PLC
Ocado Group PLC

Ocado Group PLC’s (LON:OCDO) (LSE:OCDO.L) stock price has gained 1.3% today after it released an investor update to the stock market. Ocado’s gross sales (retail) increased 13.1%, which is the same rate of growth as in the previous quarter. Average orders per week grew 16.7% to 252,000 in Q1 against 216,000 in Q1 2016. This was driven by new and existing Ocado customers.

However, Ocado’s average order size fell 1.6% to £110.84. This is a slower rate of decline than in previous quarters. The fall in this quarter was mainly due to a reduction in multi-buy promotions and further take up of the Ocado ‘Smart Pass’. This drives customers to shop more frequently and improves customer retention.

In my view, it was a case of solid progress during the quarter for Ocado. I’m upbeat about the company’s stock price because of the investment it is making in improving the customer experience and service through innovation and technological developments. This should help Ocado to keep growing faster than the wider grocery market in my opinion. I also feel customers are becoming more likely to shop for groceries online, and think Ocado’s stock price could benefit from changing tastes from consumers in this respect in the long run.

In the last 6 months, Ocado’s stock price has underperformed the stock prices of other consumer companies such as J Sainsbury plc (LON:SBRY) (LSE:SBRY.L), Tesco PLC (LON:TSCO) (LSE:TSCO.L), WM Morrison Supermarkets PLC (LON:MRW) (LSE:MRW.L) and ASOS plc (LON:ASC) (LSE:ASC.L). The Morrisons stock price is 20% higher, J Sainsbury has gained 14%, Tesco’s stock price is 18% higher and the ASOS share price has risen 22%.

In my opinion, Ocado has investment appeal. I think it is making steady progress within an evolving industry. Although I think it will take time for shoppers to fully embrace grocery shopping, I think a growing proportion will do so each year. While I’m nervous about the potential impact of Brexit on the retail sector, I think the Ocado stock price could perform relatively well in the long run.