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The supermarket sector in the UK has a been bright for the United Kingdom economy in recent months, as the ongoing series of COVID-19 lockdowns have largely helped boost supermarket sales due to many restaurants and bars being closed due to government restrictions.
Supermarket giants Tesco, Morrisons, and Marks & Spencer all observed bumper sales over the previous Christmas period. However, their respective stock prices have not seen massive gains, despite record breaking sales and increased foot traffic from customers.
Marks and Spencer’s share price is down heavily over a five-year period, however, M&S’s share price has seen a rise of over 50 percent since October last year. The main drag on Mark & Spencer’s share price has been disappointing sales outside the food sector. Other departments such as leisure wear and clothing continue to be a drag on its bottom-line.
The traditionally older customer base of the flagship company has not embraced online shopping as well as expected, and this was event in Marks & Spencer’s Q3 earning report. M&S has multiple food outlets in petrol garages, which continue to fare well during the pandemic. Overall, food sales continue to be a bright spot for the company.
Tesco posted record sales over the Christmas period, with the company seeing record sales as shoppers were forced to stay at home during lockdown. The latest company report noted that food disruptions are unlikely to take place after Brexit with Northern Irish suppliers.
The company noted that the supermarket saw customers spending more and made a larger number of purchases in one-hit. Online order also saw more growth as some customers were forced to shop online.
Morrisons posted strong sales over the festive period with an 8.5 percent improvement compared to the same period the year before. Luxury sales led the way for the increasingly popular UK supermarket chain as champagne sales soared.
The company made strong progress in December and is now amongst the top four supermarkets in the UK in terms of growth. Morrsons profits are expected to take a big hit this year after the company pay back the government $230 million from the business rates relief scheme.
In terms of technicals, Morrisons has the most catching up to do in terms of performance, and is certainly one for the risk takers, while Marks & Spencer’s looks the most vulnerable to a downturn. Tesco is a middle-of-the road and is generally seen a steady performer.
Marks & Spencer Technical Analysis
The technicals behind M&S show that the stock is trapped inside a sideways price channel and will likely make a decisive technical breakout once the 145.00 to 125.00 price range is broken.
Source by ActivTrader.
Going in-line with the trend, seeing as the stock is trading above its 200-day moving average, at 107.00, an upside breakout seems more likely. According to the size of the price channel. Bulls could target the 165.00 level over the long-term.
If the stock gains upside momentum and starts to break above 165.00 then the 200.00 and 240.00 levels are possible targets.
Morrisons Technical Analysis
Morrisons has the most to gain of all the three supermarkets mentioned in the short-term. A series of bullish reversal patterns have formed and are warning of an imminent rally towards 200.00.
Source by ActivTrader.
If bulls can reclaim the 200.00 level then a larger reversal pattern will have formed. This would indicate buyers intention to take the stock towards 240.00 over the medium-term horizons.
Higher time frame price charts show that a rally above the 300.00 level would cause a major shift towards the stock and drastically improve the technical outlook. Placing the 450.00 level as an achievable long-term target.
Tesco Technical Analysis
Tesco’s share price looks very bullish on the lower time frame and is clearly showing a pending triangle breakout. With the short and medium-term trend remaining bullish the overall direction does look higher.
Source by ActivTrader.
A bullish reversal pattern is also visible and suggests that a breakout is ongoing. According to the technical analysis the 300.00 and 320.00 levels are likely upside targets if Tesco’s stock price starts to take-off.
