Should you buy these 3 supermarket stocks amid fear of food shortage?

Highlights

  • Tesco has recently launched a checkout-free GetGo store in London that enables customers to purchase and pay without having to scan products.
  • Sainsbury’s online groceries and clothing sales increased by 29% and 57.6% year on year, respectively, for the quarter ended 26 June 2021.
  • Morrisons’ total revenue, including fuel, increased by 3.7% year on year to £9.05 billion in H1 ended 1 August 2021 compared to £8.73 billion in the same period in 2020.

With the holiday season just around the corner, shoppers in the UK are stocking up on party food, frozen delicacies and other festive specialities amid the mounting shortage fears due to supply chain inconsistencies.

Supermarkets in the UK such as Tesco and Aldi reported a surge in frozen turkey sales, as shoppers fear shortage due to the ongoing supply chain issues. Another supermarket Waitrose reported high demand for fresh turkeys and a 30% increase in pre-orders year on year.

Let us explore the investment prospect in 3 FTSE listed food retailers – Tesco, Sainsbury and Morrisons.

Tesco, Sainsbury & Morrison: Market capitalisation details

(Data source: Refinitiv)

Tesco Plc (LON: TSCO)

Tesco is a grocery and general merchandise retailer based in England. Recently, the company launched a checkout-free GetGo store in London that enables customers to purchase and pay without having to scan products or interact with a cashier at the billing counter.

The shares of Tesco are currently trading at GBX 272.05, up by 0.48% at 8:38 AM BST on Monday 25 October 2021. Its market cap is £20,914.10 million.

Tesco’s sales excluding fuel were £27,331 million for H1 21/22, representing an increase of 2.6% year-on-year compared to £26,652 million for H1 20/21. Its profit before tax was £1,143 million in H1 21/22, an increase of 107.4% year-on-year compared to £551 million in the previous year. The company’s board announced an interim dividend of 3.20 pence per share to shareholders for the period.

J Sainsbury Plc (LON: SBRY)

Sainsbury is an FTSE 100 listed supermarket chain engaged in the sales of groceries, clothing, homeware, and electricals, among others. Recently, Sainsbury called off the potential sale of its banking unit post concluding failed talks with suitors.

The shares of Sainsbury are currently trading at GBX 295.50, up by 0.65% at 8:59 AM BST on Monday 25 October 2021. Its market cap is £6,847.94 million.

For the quarter ended 26 June 2021, Sainsbury’s total retail sales excluding fuel rose by 1.6%. Its online groceries and clothing sales increased by 29% and 57.6% year-on-year, respectively, in the same period.

Morrison (Wm) Supermarkets Plc (LON: MRW)

Morrison (Wm) Supermarkets is a leading supermarket chain in the UK. The company accepted a £7 billion acquisition bid from the US-based private equity investment firm – Clayton Dubilier & Rice (CD&R).

The shares of Morrisons are currently trading at GBX 286.10, up by 0.07% at 9:14 AM BST on Monday 25 October 2021. Its market cap is £6,917.53 million.

Morrisons’ total revenue, including fuel, increased by 3.7% year-on-year to £9.05 billion in H1 ended 1 August 2021 compared to £8.73 billion in the same period in 2020. Its adjusted profit before tax was £93 million in H1 2021, representing an increase of 41.9% year-on-year compared to £74 million in H1 2020.

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