The Motley Fool

Why I’m Putting Tesco PLC On My Watch List

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

tesco2There are no points for original ideas in investing. It only matters if your ideas are any good or not. The proof of that shows in your returns.

It isn’t any secret — backed by many academic studies — that dividend stocks outperform the market over the long term. When stock prices fail to reward — as they have done this year, with the FTSE 100 declining 2% — dividends give investors a regular income stream and, most importantly, a reason to stay invested.

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...

Day to day the market has a 50% chance of moving up or down, but a smart investor — with a time horizon of 20 years or more — will at worst see low single-digit upside on a diversified share portfolio.

All the more reason to hug your income shares.   

We’re in a fierce bear market for the UK’s supermarkets. Tesco  (LSE: TSCO) (NASDAQOTH: TSCDY.US), having long reigned supreme, has lost nearly half of its value in 2014, with shares of the iconic retailer sinking to an 11-year low.

There’s nothing to suggest the shares won’t get cheaper, with a skittish market stampeding for the exits after each new trading statement, and pressure piling on from unforeseen angles, like the accounting inaccuracies that have resulted in an investigation by the Financial Conduct Authority (FCA).

If a leading FTSE 100 member drops 50%, I feel you have to at least take a look. The question is whether the new chief executive, Dave Lewis — who has so far been impressive, promptly suspending four senior directors over the £250m profit anomaly — can deliver a successful turnaround strategy.

Tesco’s roots go back nearly a century to a market stall in East London. Until now, there has never had an outsider in charge. Mr Lewis has only made fairly general statements so far — things like placing an emphasis on ‘putting the customer first’ — and I’m eager to hear more detail on his vision.

The board decided to slash the dividend by 75% to 1.16p which, in and of itself, needn’t be seen as a negative. Tesco must deliver sustained growth, and if it needs more financial flexibility to make sensible strategic investments, then it’s a move I favour. What isn’t sensible is a wholesale investment in price.

I could start selling eggs, bread and milk for 10p on the street and do pretty well in terms of sales. Could I do it forever — without bumping up the price — and make a profit? Of course not. Tesco needs to tempt customers back into its stores from Aldi and Lidl, but not by lowering prices kamikaze-style. Finding a strategic price level that strikes a balance between sales and profitability makes more sense. I’d rather see investments in infrastructure and IT so Tesco can grow its e-commerce channel.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Mark Stones has no position in any shares mentioned. The Motley Fool UK owns shares of Tesco. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

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.

Simply click below to discover how you can take advantage of this.