Hopes online grocer Ocado is soon to announce further progress on international expansion drove its shares to their highest level since mid-2015 this week. Ocado surged 7.8% to 423p on Wednesday as speculation ran rife that it was poised to follow up its first international licensing deal with Casino with a second agreement. Rumours spread that it is set to reveal another deal with Swedish retailer ICA Gruppen, a possible tie-up that was noted by The Grocer in December. Reports in Sweden are now saying a deal with the country’s biggest grocer is ‘imminent’ and is likely to be announced early this year.
But Ocado’s share price - now up almost 80% since late November - is also being propped up by rumbling takeover speculation. It has already been cited as a possible takeover target to boost the scale of Amazon’s grocery ambitions and rumours are now doing the rounds in the City that Walmart is eyeing a takeover to help its own online delivery operations. At the time of writing on Thursday, Ocado shares had climbed a further 2.8% to trade up 10.2% at 434.2 over the first week of post-Christmas trading.
Elsewhere retail stocks were helped by better than expected Christmas sales from high street bellwether Next on Wednesday and solid festive sales figures from Aldi and the Co-op. However, broker Jefferies warned the grocery performance over Christmas is likely to have been “mixed”. It tips Tesco to deliver the strongest like-for-like gains, notes Morrisons’ ability to navigate a very challenging base, but warns Sainsbury’s could be weighed down by Argos’ cyclical nature.
Finally, broker Peel Hunt has picked out B&M European Value Retail as one of its top growth stocks for 2018. It writes: “B&M is one of the few discounters adding space in the UK, and its business model of attacking category killers while offering keen value on its core range is working well. The valuation isn’t lowly but compared to its peer group of structural growth companies, it’s perfectly fair and with upgrades likely.”