J Sainsbury Share Price Forecast August 2021 – Time to Buy SBRY?

Shares of United Kingdom-based supermarket chain J Sainsbury (LSE: SBRY) are up by more than 9% at 332.25p during Monday’s early trade hours. According to a report published by the Sunday Times, New York-based Apollo Private Equity is joining the Fortress consortium to acquire J Sainsbury. This has led many investors to wonder whether this is the right time to pick up SBRY shares.

J Sainsbury – Technical Analysis

According to J Sainsbury’s financial statement, the market cap of the company is at £6.821 billion with total assets worth £25.369 billion. J Sainsbury’s revenue for 2020 is at £29.05 billion compared to £28.99 billion in the previous year.

Moving averages such as Exponential Moving Average (100)(270.7), Simple Moving Average (100)(267.6), Exponential Moving Average (200)   (253.2) and Simple Moving Average (200)(248.5) are pointing towards buying. On the other hand, J Sainsbury’s oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(41.0), Williams Percent Range (14)(−6.2), Bull Bear Power(37.6) and Ultimate Oscillator (7, 14, 28)(65.2) are pointing towards a neutral action.

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Recent Developments

As mentioned before, numerous media outlets have reported about the private equity group Apollo being interesting in Sainsbury. While initial reports were referred to as exploratory, there is a strong chance that they might be submitting an offer for Sainsbury soon. Investors reacted to this news which has pushed the share price up today. Something similar is being seen in the case of competitor Morrisons, which is in the middle of a bidding war between Clayton, Dubilier & Rice and rivals Fortress.

The attractions for Sainsbury aren’t hard to fathom either as the shares look reasonable value and changed hands for less than 14 times its earnings before this morning. The company has an impressive property portfolio coupled with the second-largest share of the grocery market in the United Kingdom. However, these are not enough reasons to guarantee a great return for SBRY investors.

Should You Buy SBRY Shares?

Investors interested in SBRY should consider some risks that many other companies have faced. There is a chance that the company won’t actually receive a bid, as has happened with many others that have looked like prime takeover candidates in the past only to not receive a bid. Examples include ITV and Burberry which didn’t receive bids in spite of being great businesses. Despite this, if investors want to pick up SBRY shares at the moment, they must be sure that the company is capable of delivering significant gains without any bid interest.

Another potential issue here is the possibility of Apollo teaming up with Fortress to launch another counterbid for Morrisons. If this came to fruition, any plans for it to acquire rivals Sainsbury will be shelved for the time being causing its share price rally to lose steam. Another interesting point to note here is that SBRY is one of the most shorted stocks on the LSE. This means that a significant number of traders are betting that SBRY prices will fall in the near future. This could of course work in their investor’s favour if the bid rumours grow as the traders mentioned above would rush to close their position. This will result in a short squeeze which will result in quite a surge for Sainsbury’s share price. Today’s share price may be a reflection of these factors. Considering all of the above factors and recent news, there is a high chance that SBRY prices will continue to rise and eventually explode in the coming weeks. The fact that the market is excited over the company’s long-term outlook is reflected by its surge in price today. It would certainly make a good addition to any investor’s portfolio at the moment.

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