Considering supply bottlenecks are in danger of disrupting the baker’s menu, Greggs share price has held up surprisingly well. Similar to fast-food giants McDonald’s and KFC, Britain’s favourite sausage roll supplier, Greggs plc (LON: GRG), is now feeling the effects of Brexit.
Due to the country’s break up with the EU, British poultry farms are currently experiencing a severe labour shortage. Furthermore, a 100,000 shortfall in Lorry drivers is adding to the woes of British food retailers. Although Greggs didn’t elaborate on the specific nature of the disruption, a company spokesman revealed they are experiencing some issues: “Unfortunately, like others, we see temporary interruptions in supply for some ingredients which occasionally results in shops not being able to maintain full availability on all lines.” However, customers can breathe a sigh of relief. The spokesman assured them the much-loved chicken bake is still on the menu. Although for how long remains to be seen.
So far, the Greggs share price has dismissed any potential speedbumps. On Friday, GRG traded to a new all-time high of 3,066p. This brings Greggs gains to more than 77% year-to-date and almost 180% from the March 2020 lows. But with the shares trading at an ATH and the threat of supply-chain issues, can GRG keep going up?
Looking at the daily chart, one thing is clear; the Greggs share price has enjoyed an easy run to the highs. Since November 2020, GRG has traded in a tight, almost 45-degree uptrend. The biggest challenge came in July when Greggs traded to the lower end of the channel at 2,500p. However, the share price passed the test with flying colours and has gone on to add another 20% in the five weeks following.
As a result, GRG is almost at the upper end of the channel, around 3,100p, Which my colleague suggests; if cleared, technically, the share price could climb as high as 3,200p.
Although I wholeheartedly agree with his technical analysis, I would not be a buyer l the supply-side issues have dissipated. Furthermore, a failure to clear 3,100p could initiate profit-taking and put the Greggs share price on the path to the lower end of the channel at 2,600p, and at that price, the shares look attractive. This is not to say that GRG can’t go higher from here. It is just my opinion that Greggs is priced for perfection. And until the share price offers a discount, I would rather wait.
For more market insights, follow Elliott on Twitter.