Down 60% from its 2023 high, the Ocado share price is on my radar

The Ocado share price has almost halved in 2024 so far. It has also crashed almost three-fifths from its 2023 high. Hence, it may well be a bargain buy today.

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So far, 2024 has been a rough ride for holders of some UK growth shares. While the FTSE 100 index is up 2.1% since end-2023, some of its stocks have been battered. For example, the Ocado Group (LSE: OCDO) share price has plummeted since the start of the year.

Ocado takes a tumble

Back in its glory days, Ocado’s share price soared into the stratosphere. During the Covid-19 lockdowns of 2020-21, the online grocer’s orders soared as cautious customers avoiding supermarket shopping.

As a result, the shares rocketed to new heights. At their all-time high, they peaked at 2,914p on 30 September 2020. Subsequently, they leapt above £28 in February 2021, but have experienced huge declines ever since.

As a result, Ocado shares have destroyed huge amounts of shareholder value. Here’s how they have performed over six timescales:

Five days-15.5%
One month-10.8%
Six months-29.6%
YTD 2024-47.8%
One year-21.8%
Five years-71.5%

Over all six periods ranging from five days to five years, Ocado stock has declined. It has almost halved in 2024 and has also dived almost 30% in six months.

Even worse, the shares have crashed by more than seven-tenths over the past half-decade. However I look at it, Ocado stock has been a nightmare for long-suffering shareholders since end-2017.

Is Ocado in the bargain bin?

As I write on Friday, 5 April, the Ocado share price stands at 395.8p, valuing the firm at £3.3bn. That’s a far cry from when the group’s valuation soared past £20bn.

The stock is also 59.7% down from its 2024 closing high of 976.4p on 28 July 2023. This surge came following unsubstantiated media reports in June of a takeover bid for the grocer from a giant American corporation. When this mooted approach failed to materialise, the shares duly collapsed.

As an older investor (I was 56 last month), I’m not interested in investing for the thrill of it. My goal is to own a diversified, balanced portfolio of stocks for dividend income and capital growth. Still, I get the feeling that maybe, just maybe, Ocado shares might too low right now.

A risky bet?

Then again, the Ocado share price is wildly volatile and unpredictable, often moving up or down by 5%+ some days. Also, note that the above figures don’t include cash dividends, because this business has never paid out any since trading began in January 2002 — over 22 years ago.

In addition, the group has never made meaningful profits in its existence, while racking up umpteen billions of pounds of losses. Therefore, its current valuation is largely built on hope for future success. Hence, I suspect that Ocado shareholders need nerves of steel to own this stock.

Even so, with the 2024-25 tax year starting tomorrow (Saturday, 6 April), I’m tempted to add this loss-making growth stock to our holdings. At the very least, it will add diversification to a family portfolio dominated by high-yielding, value, and US tech stocks.

Lastly, for me, Ocado’s proprietary logistics technology is probably its most-prized asset. Therefore, the group might actually attract a prospective bidder one day. Hence, I’ve added this stock to my watchlist for the 2024-25 tax year!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Cliff D'Arcy has no position in any of the shares mentioned. 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.

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