3 Reasons That Make J Sainsbury plc A Fantastic Stock Buy

Royston Wild looks at why J Sainsbury plc (LON: SBRY) provides a great investment opportunity.

| 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.

sainsbury's

Today I am looking at why I believe J Sainsbury (LSE: SBRY) (NASDAQOTH: JSAIY.US) is a shrewd stock pick for those seeking bumper returns.

Tills keep on ringing

The storming success of budget retailers such as Lidl, as well as high-end grocery specialists including Waitrose, continues to eat away at the mid-level supermarket space. But while the likes of Tesco and Wm. Morrison keep on struggling with their sales resuscitation plans, Sainsbury’s continues to thrive despite this aggressive fragmentation of the UK grocery sector.

Should you invest £1,000 in Sainsbury's right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Sainsbury's made the list?

See the 6 stocks

Indeed, latest statistics from researcher Kantar Worldpanel revealed that Sainsbury’s revenues advanced 2.7% during the 12 weeks to February 2, outpacing growth of 2.4% for the wider grocery market. This also pushed the firm’s market share to 17.1%, up from 17% during the same 2013 period and to within a hair’s breadth of Asda — Britain’s second-biggest supermarket — which holds a 17.3% share.

Multi-pronged approach paying dividends

Sainsbury’s devotion to developing the quality and image of its own-brand products — in particular its Taste the Difference range, which saw sales rise 10% during quarter three — is helping to defend its place in the market while its peers continue to toil.

Most notably, however, Sainsbury’s has aggressively ramped up its exposure to red-hot growth sectors. The company is seeing sales at its convenience outlets rise 18% per year, and opened 19 smaller stores during the third quarter to facilitate further growth. Sainsbury’s is also reporting solid expansion of around 10% per annum for its online business, widely identified as the next hot growth area for Britain’s retailers.

A dependable pick at great prices

Sainsbury’s has been a reliable stock for both growth and income investors for many years now, and City brokers expect the supermarket to continue churning out decent returns well into the future.

Forecasters anticipate earnings to rise 5% in the year concluding March 2014, with advances of 6% and 5% expected in the following two years. These projections push the P/E rating from 10.8 for the current year to 10.2 in 2015 and 9.8 in 2016, moving below the value threshold of 10.

And the company is also expected to keep its impressive, multi-year run of dividend increases rolling during the period — a 5.4% rise to 17.6p per share is expected this year, and which is predicted to rise to 18.2p next year and to 18.7p in 2016. Such prospective payments carry mammoth yields of 5%, 5.2% and 5.3% respectively, easily surpassing the 3.2% FTSE 100 forward average.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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 and has recommended shares in Morrisons.

More on Investing Articles

Google office headquarters
Investing Articles

$1bn a day! This S&P 500 share still looks like a stock market bargain after Q1 earnings

The owner of Google and YouTube just announced strong results to the stock market, including another massive $70bn share buyback.

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

3 cheap FTSE 100 stocks with big dividends to consider buying right now

Sector weakness in some FTSE 100 industries has also left some of my long-term favourite stocks offering attractive dividend yields.

Read more »

Growth Shares

Forecast: £1,000 invested in Rolls-Royce shares could be worth this much by next year

Jon Smith talks through both his opinion and analysts’ forecasts when trying to predict where Rolls-Royce shares could head from…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

£5,000 invested in Lloyds shares 5 years ago is now worth…

The price of Lloyds shares has more than doubled over the past five years. However, our writer’s cautious about the…

Read more »

Investing Articles

Up 58% in a year, the BT share price could be the FTSE 100 target to beat in 2025

The BT share price has been steadily climbing back since newish boss Allison Kirkby came on board. Is the new…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

£10,000 invested in Nvidia stock 5 years ago is now worth…

Even after the Nvidia stock falls of the past couple of months, its five-year performance remains stunning. And it could…

Read more »

artificial intelligence investing algorithms
Investing Articles

I asked ChatGPT for the best UK stocks to buy for my portfolio in the market sell-off. Here’s what it said

When Edward Sheldon asked the generative AI app for the best stocks to buy amid the market pullback, he was…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Could now be a rewarding moment to buy shares?

Christopher Ruane's looking for shares to buy in a turbulent market. But while he's focused on quality, he's equally interested…

Read more »