Aside from a couple of brief comments on its new discount offering Jack's, the last time I wrote substantially on Tesco (TSCO) was six months ago - when I concluded that there was another leg in the share price to come, which duly resulted. But the wheels have come off the shares in the last couple of months. I still remain unconvinced by Jack's but in the wider scheme of things in the Tesco empire it is a rounding error. I think the real issue however is that Tesco is now no longer a recovery stock and - as we all know - it is easier to travel than arrive…
The latest half-year numbers look very solid at a number of levels, including an eleventh successive quarterly like-for-like sales increase and a 24% rise in UK profitability, even if Polish and Thai trading outside of the UK continue to have their issues. Meanwhile the Booker wholesale deal has bedded in well and key financial ratios have improved, moving the group even further away from the dog days of a few years ago. The hiking of the interim dividend (+67%!) is testimony to all this, even if the company's dividend yield is still only in the range of 1.5-2%.
Prospective comments about the future medium-term strategy remain unchanged and this means further progress in cost savings (£1.5 billion by 2019-20) and the bumping up of retail margin and improvement in debt metrics. If I screw my eyes up and work out some prospective numbers, then the stock is trading at a fairly attractive multiple assuming hitting those targets. Tesco back to being a 250p stock is not a huge stretch as the early summer share price showed. The trouble is it is over the hump. Over 5,000 of the 10,000 Own Brand product re-launches have now occurred, the brand index it monitors is close to the average and internal staff measures of interaction and engagement have substantially improved. Well that is all good...but Mr Market always asks 'what is the next trick?'
And this question is probably at the heart of why the share is down 8% as I write. The big new initiative at the margin appears to be highlighting how competitive a basket of Tesco's goods are versus 'competitor A' and 'competitor L'. No prizes for guessing who it is talking about... This is not a price war per se, it is more about Tesco flexing its muscles again as the sector #1 who is not in recovery mode per se. Naturally that worries teenage scribbler analyst types...but they need to remember the food retail space is changing. The Asda/Sainsbury's deal is a big thing and will take capacity out and all of the current 'big 4' are working out how to play in a market with discounters and online delivery. Tesco stock - as I write - is a bit too cheap and a fairer value today is a return (again) to that 240/250p level. Tesco is no longer on the ropes and is flexing its muscles. The difference with its heyday is that other players have bulked up a bit. That is why the share is not going back to the 4 quid price of 2010-11...but that does not mean it is uninteresting. I want to buy some more here.
Filed under: Tesco, TSCO, BlueJay Mining, Audioboom, ITV, Kingfisher, Bellzone Mining, gold price
RISK WARNING & DISCLAIMER - FiveFreeShareTips.com tips are provided by independent authors via a common carrier platform and do not represent the opinions of FiveFreeShareTips.com. FiveFreeShareTips.com does not accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at FiveFreeShareTips.com and via emails you receive from [email protected] are for your general information and use and are not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by the tipsters or FiveFreeShareTips.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Trading shares involves the risk of loss. The tipsters and FiveFreeShareTips.com shall not be liable for any losses or other damages incurred. The value of investments can go up or down and the past is not necessarily a guide of future performance.
Well actually it will be six. One every week day and one on Sunday, each landing with you at 11 AM sharp.
Unlike other services (which may always have a vested interest) we pride ourselves on our impartiality and cover all small caps including AIM. the Standard List, The Wider Main Market and NEX.
We cover small caps, penny shares, FTSE 350 stocks and blue chips. We look for red hot penny shares, Warren Buffett style value investments with yield and growth stocks. There is no technical analysis in our work just solid fundamental analysis from a team of experts with decades of stockmarket experience.
You will not agree with all we publish but if you are interested in small caps you cannot afford to ignore it either. Yo'll never be charged for the free share tips from Five Free Share Tips and given the star writers involved you know that they will move share prices.
There's no telephone number or postal address required and there is no charge, ever, for your Five Free Share Tips membership. Just free shares tips every day apart from Saturday And each day's share tip will not just be a few thoughts cobbled together but will be detailed analysis from experts.
Our experts do not just earn their living from writing. All own shares. If they own shares in a stock they cover they will declare it and will not sell until after advising a sell to our readers. And why not our tips are so good that why shouldn't our readers put their money where their mouth is?
Don't just take our word for it! Judge us on the calibre of our free share tips and join today to start receiving them from September 1 2017. If you don't like what you get delivered to your inbox unsubscribe and you will never hear from us again. So why not give it a go? Sign Up Now
We've put together a panel of top tipsters, including:
Tom Winnifrith, in his 27th year writing about shares, noted fraudbuster & dubbed "The maverick Tipster"
Chris Bailey, City whizz kid turned financial guru, rated as one of the top 50 commentators on shares on twitter, founder of Financial Orbit
Steve Moore, has worked with Tom Winnifrith for all bar 3 weeks of his working life - a noted commentator on value stocks
Malcolm Stacey, The Grandfather of Share Blogging, the founder of ShareCrazy & a best selling autthor of stockmarket books
Lucian Miers, the Bard of the Boleyn, one of the UK's best known short sellers
Gary Newman, writes about value investing on AIM, speciality is in share tips on oil and mining companies
Nigel Somerville, The Deputy Sheriff of AIM, an expert in forensic analysis a skill used to bust frauds but also to tip true value investments
The team from HotStockRockets, specialising in AIM and small cap shares which will fly on a three month view
Remember to book your place at the UK Investor Show 2018. The UK’s top investment show taking place on Saturday 21 April 2018 at the Queen Elizabeth II Conference Centre in Westminster, London. The show will feature a unique line-up of top speakers including Nigel Wray, tech queen Vin Murria, Dave Lenigas, Mark Slater, Tom Winnifrith, Adam Reynolds, Ed, Croft, Nick Leslau Luke Johnson and Dr Johnny Hon as well as 135 exhibiting small cap companies.
The hot share tips given here are of necessity, general. They cannot relate to the individual circumstances of investors. Anyone considering following the share tips contained here should seek independent advice from a Financial Conduct Authority authorised Stockbroker or Financial Adviser. We cannot be held liable if individuals suffer losses through following share tips contained on this site or emailed out as free share tips. The value of investments can go down as well as up. The past is not necessarily a guide to future performance. Investing in shares can lose you part or all of your capital although the potential returns are theoretically unlimited. The difference between the buy share price and the sell share price for smaller company shares (penny shares) can be significant. Profits from dealing in shares may be liable to tax - the level of tax and bases of relief from tax are subject to change. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares (or 'small caps'/'penny shares'). FiveFreeShareTips.com & its sister site ShareProphets.com defines a smaller company share as any stock traded on AIM or NEX or which has a market capitalisation of less than £300 million.