CNBC Analysts are talking thematic investing, they just don’t realize it
Watching these UK-based analysts on CNBC struggle with how to describe and categorize the UK-based online grocer Ocado is amusing to us — they are trying to push a Disruptive Business model thematic company into a sector-based view. And then in a last-ditch effort, one of the analysts calls it a “story-stock.” That’s cute.
Looking at Ocado (OCDO) through a sector view doesn’t work — sector investing is dead. Instead, you have to look at it thematically to truly understand its value. Let me explain . . .
Trading on the London Exchange under the ticker OCDO, we haven’t taken a hard look at Ocado, its business model and most importantly its valuations (we certainly will do so after posting this!). But when we look at, we’ll view it within the context of two themes: Disruptive Technology and Connected Society. You see, you can’t assess its viability versus traditional grocers. Instead, you have to look at from the connected devices perspective, the company’s penetration of both Millenials and non-Millenials, and how the shopping experienced ingratiates itself into the daily lives of UK consumers. Throw in some looks through our Foods with Integrity lens, and only then would we look at the valuations and decide if there’s sufficient upside in conjunction with strong thematic tailwinds that could propel it to new heights.
But to compare it to other companies within its sector — whichever sector that might be — and investors will lose the crucial insight that only thematic investing can provide.
Of course, we also typically like to employ the investment strategy of “buy the bullets, not the gun” and we would look to see who else benefits if Ocado is able to continue its rise, and see if that’s a better angle than just looking at its stock.
Ocado, the U.K.-based online grocery retailer, would benefit from new competitor Amazon Fresh taking on some of its rivals, an analyst told CNBC.Ocado Tuesday sent out a mixed set of results: Third-quarter sales and average weekly order figures have risen by double digit percentages. However, the company also issued a warning of “sustained and continuing market pressure.”In response to this, Ocado shares fell 13 percent Tuesday. Stewart McGuire, director in equities research at Credit Suisse, told CNBC’s Street Signs that Ocado was a “twitchy stock,” with a “big short position out there,” though he considered today’s sell off an “overreaction.”
Source: Ocado would actually benefit from Amazon Fresh rivalry: Expert
