Goodfood Market (TSX:FOOD) Stock Soars 199%: Should You Buy at $9.36 Apiece?

The accelerated demand and stellar growth in its active subscriber base are leading to a rally in its stock.

| More on:
Top view of people having party, gathering, celebrating together

Image source: Getty Images

Shares of the online grocery company Goodfood Market (TSX:FOOD) are on a roll, rising about 199% so far this year. Its stock has jumped over 528% after hitting its low in March 2020. Owing to the stellar appreciation in its stock price, Goodfood Market is part of the Toronto Stock Exchange’s 30 top-performing stocks (TSX30).

Goodfood Market shares benefit from the growing demand for online grocery and favourable industry trends. The pandemic came as a significant growth catalyst for the company. Goodfood Market, part of essential services, continued to run its operations amid the pandemic. Moreover, it witnessed an acceleration in demand. 

Due to the pent-up demand, Goodfood Market reported a profit for the first time in its history. Its revenues and adjusted gross profit jumped by 74% and 50%, respectively, during the most recent quarter.

The accelerated demand and stellar growth in its active subscriber base are leading to a rally in its stock. But is this uptrend in Goodfood Market stock sustainable? Or will the demand fizzle out in the post-pandemic phase and drag its stock down? 

A look at key metrics

The most useful metric to gauge Goodfood Market’s future performance is the growth in its active subscriber base. The metric is indicative of potential revenues in the future. Its active customer base continued to grow at a robust pace and stood at 272,000 as of May 31, reflecting a 44% year-on-year growth. 

With the growing adoption of online grocery shopping, Goodfood Market remains well positioned to drive its active subscriber base, thanks to its strong footprint, best-in-class last-mile logistics, and brand affinity. 

Investors should note that the shift from traditional grocery shopping towards e-commerce is likely to sustain, even in the post-pandemic phase, thus supporting Goodfood Market’s growth by driving higher order rates and larger basket sizes. 

Another key metric to focus on is its gross merchandise sales, or GMS, which measures the total retail value of goods sold by Goodfood Market. GMS is also indicative of its future revenues. Over the past five years, Goodfood Market’s GMS has grown at an astounding pace, increasing from $3.2 million in 2016 to $292.8 million in the last 12 months. In the most recent quarter, Goodfood Market’s GMS surged 63%. 

The stellar growth in its subscriber base and GMS have driven its revenues at a high double-digit rate over the past several years. Meanwhile, Goodfood Market’s adjusted gross profit margins have consistently expanded in the past five years, which is incredible. 

Should you buy Goodfood Market stock?

Goodfood Market is one of the few TSX stocks where the rally is likely to sustain in the coming years. Its robust financial performance in the past and upbeat industry outlook suggests that Goodfood Market stock could continue to outperform the broader markets. 

Goodfood’s growing active subscriber base, market share growth, increasing product offering, and capacity expansion could continue to support its revenues. Meanwhile, its improving cost structure and lower fulfilment costs should help the company achieve margin and profit goals. 

At $9.36 a share, Goodfood Market stock is a must-have in your portfolio for outsized growth. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Goodfood Market.

More on Coronavirus

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

1 Growth Stock Down 15.8% to Buy Right Now

A growth stock is well-positioned to resume its upward momentum in 2024 following its strong financial results and business momentum.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Stocks for Beginners

3 Things About Couche-Tard Stock Every Smart Investor Knows

Couche-tard stock (TSX:ATD) may be up 30% this year, but look at the leadership and history of the stock to…

Read more »

Plane on runway, aircraft
Coronavirus

Can Air Canada Double in 5 Years? Here’s What it Would Take

Air Canada (TSX:AC) stock has gone nowhere since 2020. Can this change?

Read more »

Senior housing
Stocks for Beginners

Home Improvement Stocks Are Set to Fall (When They Do, Buy These Like Crazy!)

Home improvement stocks are due to drop further in the coming months. But with solid underpinnings for the sector, it…

Read more »

An airplane on a runway
Coronavirus

Forget Boeing: Buy This Magnificent Airline Stock Instead

Boeing (NYSE:BA) stock is looking risky right now, but Air Canada (TSX:AC) stock? Much less so.

Read more »

Man considering whether to sell or buy
Stocks for Beginners

Goeasy Stock: Buy, Sell, or Hold?

When it comes to smart buys, goeasy stock (TSX:GSY) is up there as one of the smartest money can buy.…

Read more »

Woman has an idea
Stocks for Beginners

Here’s Why Magna International Is a No-Brainer Value Stock

Magna stock (TSX:MG) has been climbing back once more, but still offers huge value for long-term minded investors.

Read more »

Aircraft wing plane
Coronavirus

1 TSX Stock Down 60% That Could Bounce Back Stronger

Air Canada (TSX:AC) stock got severely beaten down in the March 2020 COVID crash. Here's why it's probably not going…

Read more »