35 Spectacular Reasons Which Make J Sainsbury Plc A Buy

Royston Wild reveals why shares in J Sainsbury (LON: SBRY) are set to head skywards.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I am outlining why I believe shares in supermarket giant J Sainsbury (LSE: SBRY) (NASDAQOTH: JSAIY.US) are poised to resume their climb higher in line with solid earnings growth.

Supermarket sweeps up as competition crumbles

Sainsbury’s continues to defy the enduring sales struggles of its mid-tier grocery rivals, most notably Tesco and Wm. Morrison, and punch steady market share gains at the expense of its competitors. Indeed, Sainsbury has now posted 35 consecutive quarters of like-for-like sales growth, according to the company’s latest trading update this month.

And I believe that the supermarket should continue to thumb its nose at wider pressure in the UK retail space and punch solid revenue growth. October’s update revealed that, excluding fuel, total sales rose 4.6% during the 16 weeks to 28 September, with like-for-like sales heading 2% higher during the period.

This stonking sales performance continues to drive the chain’s market share skywards, and Sainsbury’s is the only one of the country’s top four supermarkets — which also includes Asda — to have increased its share over the 12 weeks to mid-September. This now stands at 16.6%, according to latest Kantar Worldpanelstatistics.

Like all of the UK’s major grocery retailers, Sainsbury’s has identified online and convenience as major growth drivers moving forwards, and saw sales in these divisions advance 15% and 20% respectively during the second quarter. Indeed, the company accelerated the rate of openings for its smaller stores, and unveiled 31 new outlets in quarter two compared with 19 in the previous three-month period.

The supermarket has cottoned onto changing consumer trends where customers shop more regularly but in smaller doses, and opened just six new large supermarkets in the whole of March-September compared with 50 convenience stores. And new store openings are set to accelerate during the final six months, with Sainsbury’s on track to deliver 1 million square feet of new floor space this year — it has already added 307,000 square feet.

On top of fresh supermarket openings and improvements to its online service, the supermarket’s concerted effort to improve the quality and image of its own-brand products — such as its Taste the Difference premium range — are also instrumental in driving sales higher. Revenues from these items are outstripping those of branded items by two-to-one. And unlike its peers, Sainsbury’s is also effectively managing its general merchandise and clothing division, where sales are growing at twice the rate of food.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Royston does not own shares in any of the companies mentioned in this article. The Motley Fool owns shares in Tesco.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »