What supermarket stock is the big winner as sales surge?

Supermarkets boosted by pandemic shift in habits

The latest Kantar data has provided a fresh look at the supermarket sector, with many of the names outperforming the wider market on a day of declines. The end of the ‘Eat Out to Help Out’ scheme brought an end to the boom in restaurant use, with September seeing a rise in retail spending according to the BRC report released overnight.

Kantar calculated that growth in business as amounting to a 10.6% year-on-year (YoY) rise in grocery sales in the four weeks to 4 October.

With coronavirus lockdown measures taking hold is the north, we are seeing tentative signs of stockpiling. Also, with a 10pm curfew on pubs, bars and restaurants, supermarkets gained an additional £261 million on alcohol sales alone in September compared to 2019. However, supermarket trips remain well below the peak seen during the pre-lockdown period in March.

From a firm-specific level, Kantar also provided a view of exactly who has been performing particularly well over the 12 weeks to 4 October.

Ocado share price: where next?

Perhaps unsurprisingly, the rise on online trade (76% YoY) has seen Ocado YoY sales rise a whopping 41.9% over the 12 weeks to 4 October. Shareholders have certainly benefitted from this shift online, with the stock up 89% year-to-date.

However, the pullback we have seen this month could provide a buying opportunity, with price falling back into a deep retracement. A break below the £22.61 support zone would negate this ongoing uptrend, but bullish positions are favoured until that breakdown occurs.

Morrisons share price: where next?

Kantar data showed a 11.5% rise in year-on-year sales for Morrisons over the 12 weeks to 4 October. This comes after a period of weakness that sent the stock back into the 61.8% Fibonacci support level at £1.69.

With the price turning higher, there is a potential we could start to see the stock turn back towards the £1.97-£1.99 zone of resistance respected in the second half of 2019 and more recently last month. To the upside, we would want to see a break through the £1.79 resistance level to signal that potential push back towards the £2.00 region.

Tesco share price: where next?

Tesco sales for that same 12-month period was slightly lower at 9.2% according to Kanter. However, the uptrend seen throughout the past five years does highlight the potential for a bullish resurgence from here.

The monthly chart highlights that bullish trend, with an ascending trendline providing us with a fresh buy signal for the stock. That being said, with a descending trendline coming into play to bring a wider triangle formation, we do need to see a breakout in the near future.

Sainsbury’s share price: where next?

Sainsbury's growth fell a little behind its peers, with a 6.8% rise in YoY sales for the 12 months to 4 October. Nevertheless, we have seen the stock rise over the course of the past month, bringing price back into trendline resistance. Unfortunately, that descending trendline does highlight the bearish trend in play here.

A break up through the £2.16 resistance level would bring about a fresh bullish signal, but the stock remains at risk of further downside until we see a bullish break through trendline and horizonal resistance