Freshlocal Solutions (TSX:LOCL) is a Vancouver-based company that provides end-to-end grocery e-commerce solutions. This stock made its debut on the S&P/TSX Composite Index back in April. Its shares have plunged over 50% since then. Is it worth snagging this TSX newcomer today?
The e-commerce grocery space experienced huge growth during the COVID-19 pandemic. Goodfood Market (TSX:FOOD) was another TSX stock that soared as e-commerce grocery shopping caught fire. However, its stock has also plunged 31% in the year-to-date period as of close on June 29.
Freshlocal released its second quarter fiscal 2021 results on May 11. Revenues rose 59% year-over-year to $34.9 million. Meanwhile, gross profit jumped 68% to $13.3 million. These results were very solid, but there is intense competition in this space.
E-commerce specialist Mercatus and research firm Incisiv recently released a report on this space. The report projected that online grocery would grow to 21.5% of total U.S. grocery sales by 2025. This would more than double its current market share. Freshlocal and Goodfood are wise to get in on this space, but grocery giants like Loblaw are standing idle.
These companies have made huge investments in bolstering their digital shopping channels. Indeed, e-commerce growth fueled earning at Loblaw (TSX:L), Metro (TSX:MRU), and Empire Company (TSX:EMP.A) in recent quarters.
Freshlocal has an opportunity to carve out a solid piece in this promising but highly competitive space. Its losses have been steep since its IPO. The stock last had an RSI of 25.
That puts Freshlocal in technically oversold territory.
