Woolworths [ASX:WOW] up Over 4% This week

Shares for Woolworths Group Ltd [ASX:WOW] have seen a spike of over 4% this week.

Woollies is one of the big supermarket chains in Australia listed on the ASX.

According to market research company Roy Morgan, Woolworths is Australia’s top grocery retailer with 34% of market share in 2018, followed by Coles with 27.6%, Aldi (11.4%), and IGA (7.1%).

Shares opened at $37 on Monday and are trading close to $39 at time of writing today.

What happened to Woollies shares?

There has been a spike in demand for food because of COVID-19.

I mean, we’ve all seen the panic buying, crowded stores and empty shelves at the supermarkets. People are buying more and stockpiling things like rice and toilet paper to prepare for what looks like will be more time spent at home.

It’s gotten so bad that Woollies is struggling with home deliveries, to restock shops and has had to place limits on how many items customers can buy. The supermarket has even launched a special hour slot for the elderly to shop.

It’s not just Woollies…

In fact, plenty of food related companies are also trending higher today, like The A2 Milk Company [ASX: A2M], Nufarm Ltd [ASX: NUF] and Metcash Ltd [ASX: MTS] — who owns IGA —, with Metcash’s share price spiking over 38%, from $2.27 on Monday at opening to $3.15 at time of writing.

What could happen next?

 Food related businesses are struggling to cope with the increase in food demand as concern for COVID-19 spikes…for now.

Truth is that Australia produces a lot of its own food with more than 90% of the fresh food, meat, eggs, milk and vegetables in supermarkets produced right here. We even have room to spare, with about 50% of what we produce agriculturally getting exported. The high volume interest for these stocks could be short lived.

In the meantime, Woollies shares are attracting some interest, while the company also pays a dividend.

If you are interested in dividend plays, you can check out our ‘Top Five Dividend Stocks for 2020’ report. You can get it free here.



Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

The Rum Rebellion