Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Sainsbury’s share price gets extremely overbought: Is it a buy?

Published Dec 08, 2023 11:15 Updated Dec 08, 2023 12:13
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Sainsbury’s share price gets extremely overbought: Is it a buy?
 
SBRY
-0.04%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

UK retailers are having a great year as the British retail sector remains quite resilient. Tesco (LON: LON:TSCO) share price is nearing 300p while Sainsbury’s (LON:SBRY) stock has jumped to the highest point in over 22 years. Marks and Spencer (LON:MKS) shares rose to over 260p, 175% above the lowest level in 2022.

Sainsbury’s is doing well

Sainsbury’s stock price has charged this year, helped by the company’s strong results and market share gains. The most recent figures showed that the company’s grocery sales jumped by 11% in the first half of the fiscal year.

General merchandise revenue rose gradually by 1.1% while clothing sales fell by 8.4%. In all, the company’s statutory sales rose by 3.5% even as fuel sales fell by 19.6%. It expects that its profit before tax for the year will be between 670 million and 700 million pounds while its free cash flow will be about 600 million pounds.

These are strong results for a company that was struggling a few years ago. Also, the management has lowered its net debt to 5.64 billion pounds. The company will pay its next dividend of 3.9 pence per share on December 15th.

It is against this backdrop that analysts at Goldman Sachs (NYSE:GS) decided to upgrade the stock. In a note, Richard Edwards moved his target from 300p to 350p. If this happens, it means that the Sainsbury’s share price will rise by over 16.5% from the current level. His statement added:

“Consequently, Sainsbury’s has seen strongly improving market share momentum, with recent market share gains outpacing Aldi.”

There are other catalysts for SBRY and other British retailers. Inflation expectations have dropped to their lowest level in two years while analysts expect the Bank of England (BoE) will start to slash interest rates in 2024.

Sainsbury’s share price forecast

SBRY chart by TradingView

The daily chart shows that the SBRY stock price has been in a strong uptrend in the past few months. Most importantly, the shares have flipped the important resistance level at 286.3p into a support point. This was an important level since it was the highest point on July 23rd.

By moving above that price, the stock invalidated the double-top pattern that has been forming whose neckline is at 240p. This is a sign that bulls have a bullish momentum. The Relative Strength Index (RSI) has moved to the extremely overbought point of 82.

Therefore, the outlook for the stock is bullish, with the next point to watch being at 310p. Still, with the stock being overbought, a break and retest pattern that pushes it at 286p could happen. In most periods, this pattern is one of the most bullish signs in the market

This article first appeared on Invezz.com

Sainsbury’s share price gets extremely overbought: Is it a buy?
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Max Nguyen
Max Nguyen Dec 08, 2023 16:13
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Invest all cryptocurrency and stocks with +447÷3992÷56625 for good profits.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email