Shares digital

Sainsbury (SBRY) 387.5p

After the share price collapsed last year due to a second failed bid by the Qatari Investment Authority, we made good gains going long on the supermarket chain back in December. However, the share price has fallen again since. We think it is worth going long again as the supermarket chain continues to look attractive given the investment climate. It announced good Christmas sales while other UK retailers were struggling, and a focus on cost cutting should also help the bottom line. Sainsbury also still has plenty of scope to narrow the gap with Tesco (TSCO), particularly in non-food, such as clothing sales. With defensive characteristics, Sainsbury should offer a hedge against rising inflation. Andrew Gibson from Galvan says: ‘The shares are a long way from the 600p offer from Delta Two. At the time of the bid interest, the net assets (land and buildings) were estimated to be 400p a share. The shares have formed a strong support base and look poised to recover.’

ACTION: BUY Sainsbury • Target 420p • Stop Loss 365p

TIME TARGET: 4 WEEKS