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Which would I buy today, the Morrisons or Sainsbury’s share price?

Although all of our major supermarkets have suffered over the past five years from the onslaught of Aldi and Lidl, the Wm Morrison Supermarkets (LSE: MRW) share price easily has the best five-year record.

Sure, it’s not brilliant with the shares down 2%, but it beats J Sainsbury (LSE: SBRY) and its loss of 20%. And Sainsbury’s, in turn, knocks Tesco‘s 30% fall into third place.

Dividends did make those returns look a little better, and though both Morrisons and Sainsbury’s were forced to slash theirs during a period of tumbling earnings, at least they kept something going — which Tesco’s couldn’t.

Shares recovering

Since the Christmas shopping period, supermarket share prices have been picking up. I’ll omit Tesco’s for now as it has its own unique problems. But which of the other two would I buy if I were to choose one of them for my ISA or my SIPP?

Sainsbury’s Christmas trading period actually wasn’t too bad, with total retail sales (excluding fuel) down 0.4% in the 15 weeks to 5 January. An essentially flat performance compared to last year seems relatively positive to me, and I liked seeing the 6% rise in online sales and the 3% uptick in convenience sales.

And though the quarter was perhaps a little weaker than some had hoped, the quarter-by-quarter trend (including Argos sales) is heading slowly upwards in both total and like-for-like terms.

Merger?

The big unknown over at Sainsbury’s, though, is its proposed merger with Asda and whether it will actually happen. If it does, will it really be the game changer that many seem to expect? I actually don’t think it will.

Yes, it will leapfrog the combined giant ahead of Tesco’s in terms of market share, and it should provide some economies of scale on the purchasing front. But, you know, I see the market as simply continuing on its path of trying to shave a few pennies off competitors’ prices and having to accept permanently lower margins.

Better Christmas

Meanwhile, at Morrisons, the festive period was significantly better, bringing in a 4% rise in total sales (again excluding fuel), with like-for-like sales up 3.6%. Interestingly, the bulk of that improvement came from wholesale and not retail.

Morrisons also noted “a change in consumer behaviour during the period,” providing more evidence that shoppers’ priorities are price, price, and price these days.

Not good value

On fundamental valuation terms, I see little to choose from between the two. They’re both on near-average P/E multiples of around 13 to 14, with dividend yields in the 3-4% range. I don’t see either as being an obvious buy right now.

We really have seen an irreversible change in the UK’s shopping habits, after the big sellers had grown complacent with their relatively fat margins and their high-end product ranges. Those good old days are not coming back.

Who wants them?

And if you’re just waiting for these supermarkets to fully readjust to the new climate, and for their shares to look decent value again, I ask, simply, why bother?

As investors, we just don’t need to own supermarket shares, not in today’s super-competitive environment. And especially not when we have the rest of the FTSE 100 overflowing with lowly-priced, high-dividend shares in other sectors.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.