The Motley Fool

Where is the Ocado share price headed in October?

Arrowings ascending on a chalkboard
Image source: Getty Images.

E-grocer Ocado (LSE: OCDO) was the biggest FTSE 100 gainer yesterday. Its share price was up almost 5.5%. It has maintained its momentum in early trading today too, with a rise of another 2% so far. While this is a positive, the fact remains that the stock has done very poorly this year. Its share price is down some 35% from last year. This questions for me, as we head further into October are, can this share price rise continue? Or will it fall further? 

Deeper partnership with Kroger

I think there are arguments on both sides. First, let us consider those in favour of the Ocado share price. There were no updates from the company itself recently, but based on media reports, I think the share price has risen on a new deal. US-based retailer (and the country’s largest grocery chain) Kroger is now extending its existing partnership with Ocado. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The two first partnered in 2018, with Ocado to build customer fulfilment centres (CFCs) for Kroger. This was extended to providing  in-store fulfilment solutions in 2020 as well. An expansion of these elements is now under way to support the retailer in doubling its digital sales by the end of 2023. 

This is a positive for Ocado, whose performance could improve further because of Kroger’s potential growth. This follows the turnaround in Marks & Spencer witnessed recently, with which it has a major tie-up in the UK. But that aside, the company has also reported robust sales numbers despite the fact that lockdowns are over. 

Analysts bullish on the Ocado share price

Some analysts are also quite bullish on the stocks. According to a Financial Times compilation, the most bullish of them expect the Ocado share price to more than double in the next 12 months. Even on average, at least a 35% rise is expected. 

Not everyone expects the stock to do well, though. The more pessimistic analysts expect a 44%+ decline in its share price. Analyst estimates are subject to change, to be sure. As the situation changes, they can be revised up or down. But they do provide a good indication of where share prices maybe headed. And this brings me to the negatives for the Ocado share price. 

What can go wrong?

The price may have fallen substantially in the past year, but it is still more than 15% higher than what it was pre-pandemic. And considering that some slowing down in sales growth has been expected at least until now, and it is still loss-making on a net basis, there is not too much of a case for its share price to rise. 

What I’d do

Yet I cannot ignore from the fact that it still appears to be going from strength to strength. Also, the economy is recovering, which should continue to hold it in good stead. Going by the sideways movements in broader stock markets in October though, I reckon this may be a largely muted month for Ocado. But over time, I think the rewards will be there to see. I maintain that it is still a buy for me. 

One FTSE “Snowball Stock” With Runaway Revenues

Looking for new share ideas?

Grab this FREE report now.

Inside, you discover one FTSE company with a runaway snowball of profits.

From 2015-2019…

  • Revenues increased 38.6%.
  • Its net income went up 19.7 times!
  • Since 2012, revenues from regular users have almost DOUBLED

The opportunity here really is astounding.

In fact, one of its own board members recently snapped up 25,000 shares using their own money...

So why sit on the side lines a minute longer?

You could have the full details on this company right now.

Grab your free report – while it’s online.

Manika Premsingh owns shares of Ocado Group. The Motley Fool UK has recommended Ocado Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.