One of the world’s major markets has always been supermarkets, grocery shopping, and food retailing. We shall require food and other products as long as we are alive in order to maintain our health and well-being. As a result of the huge demand around the world investing in supermarket stocks is not a bad idea.
In this guide, we’ll go over the eight best supermarket stocks UK in 2022 that here have already outperformed the market so far in 2021, and are well-positioned to add them to your portfolio. And also we’ll explain how and where to invest in supermarket stocks
Top Supermarket Stocks to invest in 2022
In the United Kingdom and other international markets, such as the United States, hundreds of supermarket stocks are traded. Our top selections for the best supermarket stocks to buy in 2022 are:
- Tesco (LON: TSCO)
- Sainsbury’s (LON: SBRY)
- Ocado Group PLC (LON: OCDO)
- Marks & Spencer Group PLC (LON: MKS)
- Kroger Co.(NYSE: KR)
- Walmart Inc (NYSE: WMT)
- Target Corporation (NYSE: TGT)
- Amazon (NASDAQ: AMZN)
Best Supermarket Stocks Reviewed
1. Tesco (LON: TSCO)
Tesco is the UK’s biggest supermarket company, although it also includes stores in Ireland, Eastern Europe, and Asia. The firm also has non-food operations, such as Tesco Bank and Tesco Mobile. It has annual sales of over £55 billion, and its major benefit is its unmatched scale, which was boosted by the acquisition of wholesaler Booker Group, which added thousands more convenience stores to its network. Its ownership of the country’s largest wholesaler not only makes it a key supplier to its competitors but also helps it to obtain items at a lower cost.
Tesco’s revenue growth has been progressively improving after an accounting crisis rocked the company in 2015, and since resuming dividends in 2018, it has been raising payouts. Tesco, unlike the bulk of the stock market, has not decreased or suspended its dividend in the wake of the coronavirus outbreak, and it continues to pay special dividends.
Tesco’s stock has been rising for a long time, providing stockholders with a large profit. Tesco stocks had a trading volume of £23.88 million at the time of composing this article. Its 52-week stock price high is 304 GBX, implying only a 9 percent upside objective at the current price of 277 GBX.
2. Sainsbury’s (LON: SBRY)
Sainsbury’s is one of the UK’s most dominant supermarket companies. Since 2015, the retailer has increased its dividend payout to 4.5 percent while growing sales at a rate of 4% per year. That’s in spite of increased competition from cheap grocery stores like ALDI and Lidl, as well as underperforming online grocery startups like Ocado, this is the case.
The fact that Sainsbury’s shares have been knocked down by investors as a result of increased competition is what makes them so appealing right now. Sainsbury’s stock has a forward price-to-earnings (PE) ratio of about 22.33, compared to a UK supermarket industry average of 19.6. As a result, Sainsbury’s is one of the cheapest supermarket chains on the FTSE.
However, there are indications that Sainsbury’s will be able to maintain its approximately 15% market share in the UK in the future. During the COVID-19 pandemic, the firm’s leadership publicly shifted the corporation to collect online grocery purchases. While this may damage profits in the short term, it is likely to benefit Sainsbury’s in the long run. Furthermore, the supermarket has ample cash flow to support its digital transition.
Sainsbury’s stocks had a trading volume of £6 million at the time of composing this article. Its 52-week stock price high is 342 GBX, implying a 34 percent upside objective at the current price of 254.23 GBX. These fundamentals indicate that Sainsbury’s is on the decline, making it one of the best supermarket stocks to invest in for future gains.
3. Ocado Group PLC (LON: OCDO)
Over the last few years, Ocado has grown significantly. It calls itself the “world’s largest pure-play online grocery firm” and is expanding its market share, even if it is now minuscule. Ocado’s online business has been bolstered by its automated warehouses and shipping centers, as well as its association with Waitrose, a premium grocery chain.
Ocado is growing at a significantly faster rate than its larger competitors. Revenue increased to almost £1 billion in the six months to the end of May 2020, up from £800 million the year before, but Ocado is still losing money and thus does not pay a dividend.
Ocado has a higher downside risk than most other grocery stocks because it is a growth stock. The company is valued at roughly £8.94 billion, making it one of the FTSE 100’s most valuable companies.
However, Ocado’s stock has been on a decline for a long time, providing investors a chance to buy its stocks at a cheap price. Ocado stocks had a trading volume of £2.24 million at the time of composing this article. Its 52-week stock price high is 2255 GBX, implying a 93 percent upside objective at the current price of 1164 GBX.
4. Marks & Spencer Group PLC (LON: MKS)
Marks & Spencer’s has long been known for its apparel and homewares, but in recent years, the company’s food division has grown significantly. It generates more than £10 billion in annual revenue, with 60% of that coming from food, 30% from apparel and homewares, and the remainder from its foreign section, which is run on a franchise model all over the world.
After deciding to buy 50% of Ocado’s grocery service and signing a contract to supply products to Ocado consumers once the firm’s relationship with Waitrose expires later this year, it is seeking to take its food business to new heights. Marks & Spencer has stated that it is encouraging a “one business” approach with Ocado, which might be interpreted as a possible forerunner to future closer ties between the two companies. Marks & Spencer is undergoing a change that will result in the closure of stores and the elimination of jobs.
Food has been a bright light for Marks & Spencer’s in recent years while sales of its other goods have slowed, but it hasn’t stopped the company’s overall financial performance from declining. The company’s revenue and profits both declined in the year ending March 28, 2021, resulting in a 70% reduction in its payout. It stated that it does not anticipate paying a dividend this fiscal year.
Marks & Spencer’s stock is currently in the fall, providing now an excellent time to buy this supermarket stock as it is going to grow in the coming future. MKS stocks had a trading volume of £7.83 million at the time of composing this article. Its 52-week stock price high is 263 GBX, implying a 60 percent upside objective at the current price of 163.50.
5. Kroger Co. (NYSE: KR)
Kroger Co. is an American retailer that operates multi-department shops, marketplace stores, and price impact warehouses in addition to food and medicine stores. On our list of the best supermarket stocks to purchase, it comes in fourth place. In 35 states, Kroger has almost 2,800 retail stores under two dozen banners, as well as gas stations, pharmacies, and jewelry stores. Every day, the $32 billion Corporation serves approximately 11 million clients.
Kroger was one of the first US corporations to collaborate with Ocado to automate its facilities, so the company stands to benefit from the shift to digital. It has finished seven stores powered by Ocado and is presently building three more. Online shopping and delivery are already accessible at almost all of Kroger’s locations.
Kroger released its third-quarter fiscal year results on December 2nd, 2021, for the period ending November 6th, 2021. Kroger reported $31.86 billion in retail revenues for the quarter, up 7.2 percent from Q3 2020. Sales grew 2.9 percent excluding fuel when compared to the same period last year.
Kroger’s stock has been rising for a long time, providing stockholders with a large profit. Kroger stocks had a trading volume of £7.89 million at the time of composing this article. Its 52-week stock price high is $62.52 (£56.54), implying only a 12 percent upside objective at the current price of $55.82 (£50.48). In March 2022 Kroger pays a dividend of 1.50% to its stockholders.
6. Walmart Inc (NYSE: WMT)
Walmart is the world’s largest firm by revenue, the largest employer in the United States, the world’s largest retailer, and the world’s largest supermarket chain. The firm also has a significant presence in the United Kingdom, where it owns the ASDA supermarket chain, which accounts for 17.6% of all online food purchasing in the country.
Since then, the company has expanded to become one of the world’s largest retailers, servicing around 230 million customers each week. This year’s revenue is expected to exceed $500 billion, and the stock has a market valuation of around $400 billion.
Walmart released third-quarter earnings on November 16th, 2021, and both the top and adjusted bottom lines outperformed expectations. Total revenue increased 4.3 percent to $141 billion, owing to a 9.9% increase in comparable sales in the United States.
Walmart’s stock has been rising continuously, providing stockholders a large profit. Walmart stocks had a trading volume of £8.09 million at the time of composing this article. Its 52-week stock price high is $152.57 (£137.97), implying only a 4 percent upside objective at the current price of $145.44(£131.52).
Walmart’s price-to-earnings (PE) ratio is 29.84, and the company also pays a 1.54 percent dividend.
7. Target Corporation (NYSE: TGT)
Target was founded in 1902 and only operates in the United States. It operates 1,850 big box stores that sell general products and food as well as serve as distribution centers for the company’s e-commerce sector.
Target released its third-quarter earnings on November 17th, 2021, and both revenue and adjusted profitability were above expectations. Total sales were $25.65 billion, up 13% from a year ago and above projections by more than $1 billion, indicating very good performance. Store comparable sales increased by 9.7% year over year, while digital comparable sales increased by 29%.
Target’s stock is now in the fall, providing now an excellent time to buy. Target stocks had a trading volume of £4.03 million at the time of composing this article. Its 52-week stock price high is $268.98 (£243.23), implying an 18 percent upside objective at the current price of $226.05 (£204.46).
Target’s price-to-earnings (PE) ratio is 16.03, and the company also pays a 1.59 percent dividend.
8. Amazon (NASDAQ: AMZN)
Amazon has been growing its supermarket holdings in recent years, which makes sense given its goal of becoming the “Everything Store.” Amazon’s most prominent move into the grocery business was the acquisition of Whole Foods in 2017. Whole Foods isn’t widely distributed – it only has 500 stores in the United States and seven in the United Kingdom but it provides Amazon with a presence in both countries and establishes grocery supply chains.
Amazon stock, in general, is a good long-term investment. You’re not only investing in a supermarket stock with this firm; you’re also investing in a big eCommerce industry, Amazon Web Services, and much more. Amazon has a high P/E ratio of 49.78 and does not pay a dividend, but there’s every reason to assume it will keep growing.
Amazon stocks had a trading volume of £3.63 million at the time of composing this article. Its 52-week stock price high is $3773 (£3412.68), implying a 16 percent upside objective at the current price of $3225.01(£2917.02). These fundamentals indicate that Amazon is on the decline, making an ideal time to invest in one of the best supermarket stocks to invest in for future gains.
Should you invest in Supermarket Stocks?
Many investors regard supermarket stocks to be a good investment, especially when the stock market as a whole is performing poorly. This is because consumers require food and other essentials such as cleaning products regardless of whether the economy is booming or struggling. During a recession, many equities decrease, but supermarket stocks often soar as investors seek a safe haven for their money.
Investors were notably interested in supermarket stocks during the coronavirus pandemic last year. Grocers were not only somewhat immune to the epidemic as necessary enterprises, but they also saw a surge in business as people were prevented from eating out and stocked up on food and other necessities.
Although supermarket stocks may underperform the overall market during periods of great growth, there is a positive aspect to investing in these companies over time. Supermarkets are among the most dependable and high-yielding dividend companies since their business is reasonably consistent throughout time. Sainsbury’s, for example, pays a 4.01 percent dividend yield, Kroger a 1.50 percent yield, and Wallmart a 1.54 percent yield.
That’s a big bonus when it comes to income investing. Furthermore, in terms of an overall return on investment, supermarket stocks are quite competitive with other types of low-risk investments.
Where to buy Supermarket Stock in the UK?
You’ll need a high-quality stockbroker to buy supermarket stocks in the UK. Which supermarket stocks you can trade will be determined by your broker. Furthermore, different brokers charge varying trading fees and offer different trading platforms and tools.
With that in mind, let’s take a closer look at our top two picks for buying supermarket stocks in the United Kingdom:
One of our highly suggested UK brokers for buying and selling supermarket stocks is eToro. This broker offers to trade on over 800 equities in the United Kingdom, the United States, Europe, and other countries, allowing you to trade practically all of the finest supermarket stocks. eToro also offers 450 exchange-traded funds (ETFs), many of which include supermarket equities from the FTSE 100 and NYSE.
Furthermore, while buying and selling stock CFDs, eToro charges no commission and offers some of the lowest spreads in the UK. There are withdrawal and inactivity fees on the platform, however, they are minor and quite easy to avoid.
eToro also provides a social trading network that allows you to connect with millions of other traders from all around the world. eToro creates a market sentiment score for each stock using this network so you can tell if it’s trending up or down. Using the copy trading tool, you may also imitate the trades of investing professionals or create a diversified portfolio in seconds.
The Financial Conduct Authority regulates eToro, and customers are covered by the Financial Services Compensation Scheme. Customer care is available via phone and email 24 hours a day, seven days a week.
- Trade over 800 equities from around the world
- On stock CFDs, there is no commission
- A trading platform with over 100 indicators is available
- Copy trading is supported
- Customer service is available all the time
- Withdrawal and inactivity fees
Plus500 has achieved a reputation for itself in the internet world since its inception in 2008 by providing free trade commissions on an innovative but incredibly user-friendly trading platform. If you choose Plus500, you will have access to hundreds of shares from numerous exchanges, including Supermarket stocks, through CFDs. With a minimum investment of 0.5 shares, Plus500 offers a spread of 1.25 percent when trading Supermarket stocks. Furthermore, you will be able to trade Supermarket stocks with a 5:1 leverage.
Traders can also benefit from a fully feature-rich trading platform on this platform, which contains an advanced charting package, a variety of risk management tools, an economic calendar, and a price notifications service. Plus500 requires a minimum investment of £100 to get began, which you can provide via bank wire transfer, credit/debit card, or Paypal. You can create a free demo trading account with fake money if you want to try out the platform.
- CFD platform with no commissions — you only pay the spread
- Feature of price alerts
- Provides a demo trading account
- Excellent software for mobile devices
- Retail clients can trade CFDs on stocks with up to a 5:1 leverage
- A number of risk management tools are available
- The FCA is in charge of regulation
- There is no social trading available
- Experienced traders will benefit from this
How to Buy Supermarket Stocks in the UK?
We’ll demonstrate to you how to buy stocks with eToro, which has a big range of supermarket stocks and charges no commission.
Step 1: Create an account
Visit eToro’s website or install the eToro mobile trading app for iOS or Android to get started. Set up an account with your email, Google account, or Facebook account by clicking ‘Join Now.’
Step 2: Verification
To follow anti-money laundering rules of United Kingdom, eToro asks you to verify your identity. Submit a copy of your driver’s license or passport, as well as a copy of a recent financial statement or utility bill, to finish this step.
Step 3: Deposit Funds
A minimum deposit of £140 is required by eToro, which can be made through a debit card, credit card, bank transfer, or e-wallet (including Neteller and Skrill).
Step 4: Search Supermarket stocks
You’re now ready to use eToro to buy your first supermarket stock. Go to your account dashboard and use the search box at the top of the page to find the company you wish to invest in. When it appears, click the ‘Trade’ button.’
Step 5: Buy Supermarket Stocks
Enter the amount you want to invest in supermarket stock in the order form. You can buy fractional shares on eToro, which means you can invest any sum over £50. If you’re trading CFDs, you can also select a stop loss or take profit level for your order, as well as use leverage of up to 5:1.
Click ‘Open Trade’ to acquire supermarket stock once your deal is ready.
The supermarket sector is developing at a rapid speed. Many changes are already taking place in the grocery business, which could result in significant changes in the market shares and values of top UK and US supermarkets in the next years.
The top supermarket stocks, on the other hand, have decades of retail experience. They’ve already demonstrated their capacity to negotiate difficult situations and adapt as necessary.
In general, investors are interested in the grocery industry right now. Investors interested in grocery stocks should search for companies that have long-term competitive advantages and the financial power to continue investing in expansion.
If you’re looking to invest in supermarket stocks in 2022, one of the eight companies listed above is a good place to start. To get started investing right away, create an eToro account!
Frequently Asked Questions
What is the UK’s largest supermarket firm?
Tesco is the largest supermarket firm in the United Kingdom, with a market share of 27 percent. Tesco has a market capitalization of more than £28 billion.
Where to buy Supermarket Stocks?
eToro is the best broker to buy Supermarket stocks with zero commissions.
What dividend-paying supermarket stocks are there?
Tesco and Sainsbury’s are two UK stocks that pay dividends. Walmart and Kroger are two US stocks that pay dividends.