📖Greggs plc is a British bakery chain. Despite being a household-name bakery, in 2020 it has been relying on government support and is not expected to return to profit until 2022, and recently reported its first annual loss since the 1980s.Prior to the coronavirus, Greggs was enjoying year-on-year growth in sales (13.5% between 2018 and 2019) and profit (27.2% between 2018 and 2019). In its most recent quarter, the company showed a 31% decline in sales from last year. Despite the announcement of a two national lockdowns in the UK, with a stay-at-home order in place until mid-Feb, Greggs price has rallied since September, given a boost by the announcement of the Pfizer vaccine. Greggs currently has 600 stores in operation and is planning to increase that total to 800 by 2021. It appears as if Greggs stock is assuming the UK is on its way to normality soon, whereas UK CMO says this is ‘a long way’ away.
📈 The stock price soared over 100% in 2019, but the first 3 months of 2020 wiped out those gains. It appears as if Greggs stock is assuming the UK is on its way to normality, despite the widespread social restrictions. GRG is again testing a key resistance zone at 1920-1940p. Price has tried to close above this level at least 8 times since April 2020 and has failed. I rarely plot both long and short positions on a chart, but i will here to both bullish and bearish price action scenarios. The bullish scenario would see a green candle close above the 1940p level - and above the descending trend line - and price may continue in the bullish price channel to the -0.5 fib extension to 2324p for 20% upside. The bearish scenario would see a breakdown of the price channel, and a fall to the 0.5 fib retracement level, perhaps, for a 17% move. The fundamentals favour the bear case, the technicals favour the bull case, so watch closely. Both trades offer a good R/R - 5:1 for bull and 3:1 for bear case.
🔎This is not financial advice. Always do your own research and due diligence.
The bull case played out well. Greggs has managed to adapt fantastically with their partnership with just eat (accounting for 5% of their sales) did well through lockdowns and post.
Their few drive-through stores outperformed their walk-in stores from 2020 to now. They managed to open more stores than they closed despite the pandemic and are planning to open more drive-through stores which could further increase their profitability. They have managed to recover quite quickly and I think it would be a great recovery stock play to buy this. I'm up 50% since buying them in the winter.
Will be making great use of any corrections in the future. Fundamentals and technicals are looking promising for Greggs in the coming years.
Their few drive-through stores outperformed their walk-in stores from 2020 to now. They managed to open more stores than they closed despite the pandemic and are planning to open more drive-through stores which could further increase their profitability. They have managed to recover quite quickly and I think it would be a great recovery stock play to buy this. I'm up 50% since buying them in the winter.
Will be making great use of any corrections in the future. Fundamentals and technicals are looking promising for Greggs in the coming years.