11.5 C
Houston
Sunday, January 17, 2021

It’s The Lockdown Trade That Keeps On Delivering

By Michael Msika, macro commentator at Bloomberg Markets

In the midst of the value and cyclical stocks re-rating, food delivery shares — winners during last year’s lockdowns — are showing renewed strength. While vaccine prospects are keeping hopes of an economic rebound alive, surging Covid-19 cases and tighter restrictions may fuel the pandemic trade for a little while longer.

Since Dec. 14, a basket of lockdown winners is up 11%, outperforming the Stoxx 600 and European cyclicals by 7 and 5 percentage points, respectively. Food delivery stocks such as Just Eat Takeaway and Delivery Hero, as well as online retailers THG and Zalando, are all up between 16% and 20%.

“The lockdowns implemented in mid-December in Germany, Netherlands and in the U.K. will continue over at least half of the first quarter with a real risk of a new lockdown in France or at least further curfews,” says Bryan Garnier analyst Clement Genelot. He sees e-commerce as being “a structural winner of Covid,” with no significant step-back in online penetration post-pandemic. HelloFresh is his top pick for the first quarter.

The lockdown trade had lost momentum in late autumn, when signs of vaccine progress and the U.S. election results spurred a rotation into value and cyclical stocks. With restrictions spread more unevenly across Europe this time around, corporate updates may shed light on which companies are faring better than others.

First up is Just Eat Takeaway’s trade statement, due tomorrow. JPMorgan analyst Marcus Diebel recommends buying the stock, citing continuously strong order momentum across the portfolio as measured by the bank’s food delivery data tracker.

Bank of America analysts including Adrien de Saint Hilaire are “incrementally bullish” on Just Eat Takeaway and German peer Delivery Hero, expecting annual revenue growth of about 20% and 40% in the next three years, respectively. The industry is now beyond “peak losses” as delivery starts to scale and the market rationalizes, they write.

The industry may also see more deal activity. A $1.6 billion capital raise announced by Delivery Hero last week gives the company more firepower for M&A, Barclays says.

That said, short interest has been on the rise since the beginning of the year, and remains at elevated levels for all food delivery stocks. After 2020’s strong rally, the analyst consensus also indicates little to no upside, except for Just Eat Takeway.

The increasing reliance on online services may last beyond the current crisis, according to many analysts. Goldman Sachs see Europe’s digital economy at a “tipping point,” identifying leading players. Among them are Adevinta, Allegro, Asos, Boohoo, Embracer, Entain, Farfetch, Flutter, Just Eat Takeaway, Ocado, Prosus, Spotify, Stillfront and Zalando. As for food delivery stocks, Goldman sees their double-digit growth continuing into 2021 and beyond.

Zerohedge

Latest news

“Tough Months Ahead” – NYC’s Lackluster Recovery Continues To Decimate Businesses And Livelihoods

Indoor dining is banned; offices are empty; city dwellers are fleeing the metro area. The virus pandemic has deeply scarred New York City's economy that will...

What Will WHO Experts Find During Their Wuhan Trip?

On Jan. 14, a team of experts from the World Health Organization was finally allowed to travel to Wuhan and investigate the origin of the CCP (Chinese...

What Will WHO Experts Find During Their Wuhan Trip?

On Jan. 14, a team of experts from the World Health Organization was finally allowed to travel to Wuhan and investigate the origin of the CCP (Chinese...

Related news

“Tough Months Ahead” – NYC’s Lackluster Recovery Continues To Decimate Businesses And Livelihoods

Indoor dining is banned; offices are empty; city dwellers are fleeing the metro area. The virus pandemic has deeply scarred New York City's economy that will...

What Will WHO Experts Find During Their Wuhan Trip?

On Jan. 14, a team of experts from the World Health Organization was finally allowed to travel to Wuhan and investigate the origin of the CCP (Chinese...

What Will WHO Experts Find During Their Wuhan Trip?

On Jan. 14, a team of experts from the World Health Organization was finally allowed to travel to Wuhan and investigate the origin of the CCP (Chinese...

Demon Nancy Pelosi Cheers National Guard Troops in DC Today After She Attacked Trump For Sending in National Guard During DC BLM Riots

So What changed, Nancy? The video at the bottom of this article shows how Nancy Pelosi’s views on using National Guard troops against protestors in Washington, DC...

Democrat DC War Zone vs. The Hunger Games (VIDEO)

In the days leading up to the Biden inaugural, the nation’s capital has been turned into an occupied military zone like Baghdad. In fact,...

Migrant caravan on its way here, EXPECTS Biden to HONOR his ‘commitment’ to them

That didn’t take long. With President Donald Trump leaving office (we guess) and Joe Biden getting ready to move in (until Harris takes over),...

Goldman Sounds The Alarm On Stocks: When Euphoria Is This High, “It’s A Good Time To Reduce Risk”

The past few months can best be characterized as a period of unprecedented market optimism and sheer euphoria, and we have done just that...

Outrageous! Loews Hotels Will No Longer Host Josh Hawley Fundraiser After He Challenged Questionable Pennsylvania Election Results

Loews Hotels canceled a fundraiser for Senator Josh Hawley (R-MO) after he challenged the election results in Pennsylvania. Pennsylvania was rife with fraud in the...