Morrison has been a rare winner so far this year. Is it time to sell?
Morrison's (LSE: MRW) first-half results were always going to be good.
In cash-strapped times, the tendency is to move to cheaper grocery shopping. So the supermarkets at the lower end of the snobbery scale tend to do better.
Sure enough, Morrison reported a 7.3% rise in first-half profits as record customer numbers went through the doors. Like-for-like sales were up by 2.2%, beating forecasts at a time when its main rivals are expecting a fall in revenues.
Morrison's shares are ahead by 9.4% factoring in the final dividend, since I thought it to be Britain's best value supermarket in January. They now stand at 295p. This is no mean feat considering the market backdrop.
In January, I said: "If the consumer environment really is as difficult as the boss is telling us, then Morrison should benefit from this in relation to its peers in the year ahead".
This proved to be accurate. The group's main UK-listed rivals Sainsbury (LSE: SBRY) and Tesco (LSE: TSCO) are down by around 20% and 10%, respectively, over the same period -- Asda is owned by Wal-Mart (NYSE: WMT.US).
Where's the value now?
So Morrison has certainly proved to be the safe harbour in stormy waters many investors perceived it to be before the sea got really rough in the summer. The question now is whether it's time to switch allegiance to one of the rivals.
In short, I'd say "yes, probably" if you have to pick just one, but any of the three will be reasonably good investments from this point.
Sainsbury is now slightly cheaper than the other two on the basic value metrics of price-to-earnings ratio (P/E), a yield of 5.4% and price to tangible book value of just over one after its heavy falls. And it was on this basis that I bought in last month at 281p.
If you believe the brokers' anticipated growth into 2012 for Tesco, then this, the UK's biggest supermarket, just has the edge on a P/E of 9 for next year. And Tesco has the advantage of deriving almost half its revenue from overseas.
But there's not much in it across the board. So using your own gut instinct, if you don't see the economy improving any time soon, then Morrison is one to stick with for the foreseeable as a safe haven.
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> David owns shares in Morrison & Sainsbury. The Motley Fool owns shares in Tesco.