Ocado’s share price has fallen. Should I buy the stock now?

first_img Ocado (LSE: OCDO) is a stock I’ve been keeping a close eye on for a while. That’s because it’s one of the fastest growing companies in the FTSE 100 index, with five-year annualised sales growth of 16.1%.But recently, Ocado’s share price has pulled back. Is this a good opportunity for me to buy? Let’s take a look at the investment case.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Ocado’s share price has fallenThere are a number of things I like about Ocado. Firstly, it’s generating strong growth in its retail segment. The company’s recent full-year results showed it generated growth of 35% here for the 52 weeks to 29 November. That’s an impressive level of growth. Earnings before interest, tax, depreciation and amortisation (EBITDA) in this division also came in at £148.5m – up 266% year-on-year.Secondly, the group has a unique automation technology offer in its ‘Ocado Smart Platform’ (OSP). This is an end-to-end solution that helps other supermarkets move online. Supermarkets Ocado is currently working with include France’s Groupe Casino, Canada’s Sobeys, and Australia’s Coles. Ocado says seven out of its nine current partners will be using its platform by the end of this financial year.Overall, I think the future looks bright for Ocado.Will online grocery shopping growth continue?That said, there are a few risks that could hit the share price. One is that, post-Covid-19, online supermarket sales could fall as shoppers return to stores. But Ocado’s CEO Tim Steiner believes online grocery shopping is here to stay. He expects online grocery in Britain to double in size again over the next few years.However, not everyone is as bullish as Steiner. For example, Christian Härtnagel, CEO of Lidl GB, believes that online sales growth will moderate in the near term. He believes that as the crisis recedes, so will online grocery penetration.“A lot of people are talking about the new normal, I’m absolutely convinced that we are not in this new normal right now, we are in the temporary normal, we are in an extraordinary time,” he told Reuters recently.Another issue to be aware of is that the OSP is losing money. This is impacting group profitability significantly. Moreover, Ocado is spending a lot of money to invest in this side of the business. Recently, the company told investors that total capital expenditure for the group is expected to be around £700m this year. This large amount of investment appears to be testing investors’ patience and affecting the share price.It’s worth pointing out, however, that Bank of America analysts believe profits from this division will kick in in 2022. That’s not too far away now.Should I buy Ocado shares?Overall, I’m cautiously optimistic on the outlook for Ocado shares. This is a more speculative stock, in my view, because the company is currently losing money. However, after the recent share price pullback, I’m a buyer of the stock. “This Stock Could Be Like Buying Amazon in 1997” Edward Sheldon, CFA | Wednesday, 10th March, 2021 | More on: OCDO Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. 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.center_img Our 6 ‘Best Buys Now’ Shares See all posts by Edward Sheldon, CFA Simply click below to discover how you can take advantage of this. Ocado’s share price has fallen. Should I buy the stock now? Image source: Getty Images. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.last_img

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