I’d buy this stock that rallied yesterday despite the FTSE 100 index falling 4%!

first_img Jonathan Smith | Tuesday, 17th March, 2020 | More on: SBRY I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I’d buy this stock that rallied yesterday despite the FTSE 100 index falling 4%! Yesterday, the FTSE 100 index fell by another 4%, at one point trading below 5,000 points. This adds to the already dismal 2020 performance, with the index down over 30%. Yet amidst this gloom, there are some firms that are holding their ground. The one that stood out for me yesterday was J Sainsbury (LSE: SBRY). The giant supermarket chain actually rose by 0.5% yesterday. This would not be that impressive during a normal trading day, but given that the vast majority of firms in the index fell, posting any kind of gain is a big deal.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The pastBefore I get into the reasons I like Sainsbury’s today, I should first address the elephant in the room. In November last year (the latest trading update we have), it said half-year profit dropped a staggering 92%. Revenue stayed broadly flat, and we saw a £229m write-down in the value of the property portfolio of the business.As a result, the share price has since struggled to make a meaningful move higher. This compounded a longer-term trend of a slowly falling share price over the past decade. When you add in the market-wide sell-off the past month, it has put the share price at a 20-year low.Any firm with a share price at a two-decade low is not an immediate buy, I get that. But there are still several reasons I would strongly consider buying it.The present + futureA key reason is current consumer demand. The products it stocks are in demand as consumers stock up on everything from toilet paper to tinned food. That means empty shelves across the country. With Sainsbury’s being one of the big four supermarkets (it had a share last year of 15.9%) this is good for the business. When half-year 2020 results come through, I would bank on a spike in profits.But we like to think long term here at The Motley Fool and would not suggest buying a share on a short-term trend.So my second reason is future consumer demand. We have been riding the longest bull market in history over the past decade. Supermarkets like Sainsbury’s have had a tough time as more upmarket rivals Waitrose, cheaper rivals like Aldi and Lidl, and online grocer Ocado take market share. Whether the coronavirus is a catalyst for a recession or not remains to be seen. But I do know that the bull market is coming to a close. When we do see a recession, supermarkets are a defensive sector that should still perform well during a downturn as they sell essentials. Ultimately, the demand for most of its products is constant due to them being necessities, not treats (although it sells those too). This provides a baseline of revenue for a firm like Sainsbury’s, even when the broader economy is struggling.So would I buy it at 20-year lows? Well, if I believe in its potential, I have to buy-in somewhere. I’d much rather buy it on the cheap with a P/E ratio of 9.4 than have to pay over the odds for it at 15 or 20 times earnings. Enter Your Email Address Simply click below to discover how you can take advantage of this. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Image source: Getty Images center_img Jonathan Smith andThe Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares “This Stock Could Be Like Buying Amazon in 1997” Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Jonathan Smithlast_img read more

Read More →