Key Points

• Sainsbury’s stock price is up over 20% in the past year.
• Sainsbury doubled its online sales.
• Opened 3 new supermarkets and 5 convenience stores in Q3. 

The Sainsbury (LSE:SBRY) share price was up over 20% in the past year. This is far ahead of the FTSE 100, which was up around 14% in the same period. But will this important UK supermarket’s shares continue to climb higher in 2022? Let’s explore.

The rumoured takeover of Sainsbury

In 2021, there were some major deals in the UK chain stores. Principal among these was the proposed takeover deal of WM Morrison by US private equity firm Clayton, Dubilier & Rice (CD&R). In fact, shareholders approved a £7bn deal in principle. Thereafter, there were speculations of a potential takeover of Sainsbury which pushed its share price to a seven-year high. However, this is over or at least for now.  

Sainsbury share price: Q3 Trading Statement. 

Sainsbury announced a strong result in its third-quarter trading update. Firstly, thanks to some bold investments by management, the company successfully expanded its market share. New products and services introduced by the supermarket giant had also engineered positive changes, with over 600 new products stocking shelves.

The firm also launched a record recruitment drive that brought in 22,000 temporary workers to serve its customers better, especially during the busy Christmas period. As Sainsbury employed, the group equally opened three new supermarkets in Colwick, Ludlow and Aylesbury and five convenience stores.

Online sales almost doubled the levels seen two years ago. Realizing that happy employees lead to better service delivery, Sainsbury invested £100m to increase workers pay to £10 per hour, which will start from March this year. While that could have an impact on margins, the increase in sales should be able to absorb most of the rising costs.

Will the Sainsbury share price continue to climb higher this year?

The market loves companies that show strong fundamentals and grow over time. So, it’s not surprising for such a company’s stock to soar. That being said, its short-term performance has been pretty lacklustre, with the stock down over the last one, three, and six months, respectively.

With inflation pushing up supply costs, Sainsbury is already passing on this expense to customers. And consequently, consumers may start looking to cheaper discount stores to keep their shopping bills as low as possible. So, I can understand the concern investors are having.

But despite this, based on the latest figures, I believe the Sainsbury share price has the potential to continue its upward trend into 2022. Consumers staples never go out of fashion after all.

Concluding thoughts

Sainsbury operates both supermarkets and convenience stores across different cities and locations in the UK. The company sells over 90 thousand products and employs over 185000 employees in the UK and Ireland. Over the past year, the stock has beaten the market, and personally, I think it can continue to do this in 2022 and beyond. That’s why I’m considering it for my portfolio today.

Learn more about Sainsbury…

• The Sainsbury share price is rising on possible Apollo buyout
• Tesco vs Sainsbury’s share price: Which should I buy?

Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.