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Thanks Accountant, good read. The article pretty much sums up my rationale into buying here last month. Not forgetting that it was Tesco that initiated the return of the business rate relief cash to the Government. Not so sure about TSCO being seen as a T/O opportunity but the online delivery infrastructure must look attractive to the likes of Amazon.
I also agree with the comments in relation to Aldi and Lidl, they have lost some market share due to the size of the stores, lots of shoppers finding social distancing difficult in much smaller stores.
Fingers crossed that TSCO can hold on to some of these when a degree of normality returns.
What a joke Aldi is, only store where it’s a Covid free for all, there was some Eastern European’s playing footy in one isle with no masks on. Customer experience couldn’t be any worse, no festive music, like shopping in a morgue
I think there are two pretty safe bets at the moment. Supermarkets who are almost covid risk free. People still need to eat and when lockdowns occur people but even more....second is healthcare, a booming area right now. The special divi is a bonus. My estimate is half of the loss from sp going ex-div will be retained because Asia only contributes 13% of Tesco’s profits. Div is c25%. This has to be the safest share in the ftse100 with huge upside potential for 2020 AND 2021 results. Beyond 2022 will be interesting to see where Tesco heads
interesting steer- im trying to work out do i hold and take the obvious upside as the price gains or do i hold post payout and see what level it drops by.
have some reservations on actual value- lots reported at 51p per share but thats post pension contribution and a bigger worry is they may share buy back rather than straight divi.
any views?
I don’t think anybody knows really. In my view sp May drop by 12% but you get 13% upside from divi if you don’t pay tax. Mine are in an isa so no tax to pay. When people realise that through covid supermarkets who have home delivery devices like Tesco are wiping the floor with Lidl and Aldi sp will recover again. Also as we enter recession people will, as they always have, pile into gold and defensive stocks like Tesco. So next year I think sp May rise back to this level which means we keep all 25% upside.
Webba1 - I think you will have to hold Tesco for 3-6 months for sp to recover and grow. My worst case scenario is it starts at £2.20 before ex div and recovers to 1.96, giving 12-13% upside. Best case is sp rises to £3.00 pre div and recovers to £2.48. Just my opinion but as everyone says dyor
No mention of BUY Back anywhere to my knowledge from the company. Just special dividend and share consolidation. Plus of of the pension payment.
I like your way of thinking, it has been a long time since this share was close to £3.
I agree. Likely a dividend. Retail investors like pensioners looking for income AND pension funds likely to flock here on the news when press coverage increases
Sold my Hyve and Cine shares to come over here. Who would have thought Tesco could be the next covid and brexit play....lol
I think Tesco could add 30-50% in value inc div over next 3-6 months. While the attraction of 100% upside on Cine and Hyve was exciting the prospect of covid dragging on for the whole of 2021 renders both close to bankruptcy. Need to be able to sleep at night...
Dizzy heights of £2.30 again. Will this be reined in for the lunchtime close? Sold the rest of my LLOY shares this morning with a tidy profit and bought a few more here. Sadly not Isa wrapped. Looking like most of England will be in tier 4 after the New Year and TSCO likely to be one of the few retailers making good money.
Going forward, costs should be down running the Pension Fund and I would hope that it's online delivery will have gained greater market share. Booker also doing very well and exceeding expectations. A deal in EU trade will also help but imo the company would have had that covered with alternative supply lines.
All looking very positive. All LSE members have a great Christmas and New Year despite this awful pandemic and sincerely hope all stay safe, particularly your family and loved ones.
Dizzy heights indeed. I reckon £2.40+ by close IF we secure a favourable brexit deal
The longer covid drags on the more sp appreciation we will see. Best wishes for a happy and healthy new year Leas. Hope everyone on LSE stays well
Hi Leas,
Unfortunately, in the short term, there won't be a significant gain in market share for online shopping. The stores are at capacity and are restrained by resources, in particular, drivers. Over the next three years, there will be 30 new UFCs and these certainly hold out the real possibility of taking share from competitors.
My opinion is if you do not need the money,sit tight with these shares as they are solid,respective of the share price
Just finished reading Terry Smiths book Investing for Growth and so now feel a fully qualified commentator on all things financial (lol) . However, one point he continues to make, and whatever your views you cannt but agree he knows what he's doing (with £22Bn of others money!), share buy backs should only be considered IF there is no better use for the available money. He holds that many buy backs are a sign of un-imaginative management peddling the view that buy backs take shares off the market so improving the yield,and price of the remaining shares on the market. If TSCO are using mone yo pay down debt / pension shortfall and their is no better use of the cash then fine, but in such lean dividend times, a decent windfall special would be most welcome. So we gain on one hand, but could he be correct and TSCO seniors dont actually have an imaginative use for the cash to improve the business long terms and hence sp growth?? Answers to eltel@fundsmith.
Agree Chelwood.
Rosewall
Market share in relation to it's competitors when the pandemic is in the past. Surely their online delivery service has stood out head and shoulders above the others. A vulnerable friend of mine uses 3 and say's TSCO beats them all hands down. More slots available, arrive on or around allocated time and rarely have missed items.
As for UFC's TSCO will adapt accordingly. I'm sure Amazon would like to rethink their relationship with MRW.
John Allan, no change and no significant price rises. As we were.....
https://www.msn.com/en-gb/money/other/tesco-boss-explains-what-the-brexit-deal-means-for-food-prices-in-supermarkets/ar-BB1chwbL?ocid=msedgntp
Leas
I would have to agree with you about the quality of service provided by Tesco colleagues, no doubt about it. What I am saying though is, if the trend towards online delivery continues, it will be an uphill struggle to take market share because of resource constraints. Tesco Now looks like a good opportunity, a growth area. Maybe rebadge Deliveroo.
Leas
I would have to agree with you about the quality of service provided by Tesco colleagues, no doubt about it. What I am saying though is, if the trend towards online delivery continues, it will be an uphill struggle to take market share because of resource constraints. Tesco Now looks like a good opportunity, a growth area. Maybe rebadge Deliveroo.
Rosewall
Maybe this is the area that they will need to focus on and invest. Obviously online sales are growing, particularly with the younger generation but there will always be a demand for shops and stores.
Stores always seem busy at weekends and bank holidays as I’m sure people still like the experience of selecting their goods and putting it into their trolley’s.
Hopefully TSCO will be good at all customer trends.
Let’s see if the other big 3 can keep pace. I have my doubts, particularly now Asda has been sold off. Their assets will be sold off bit by bit with little investment.
Hi leas,
Yes, I can't ever imagine a time without physical shops and stores. Home deliveries will become greener over time and I can see a hybrid market place where people go in store for fresh foods with the rest being delivered
thanks for views - as for the share buyback, this is referenced in pretty much every article ive seen on this.
this from proactive investors (first link i used)
“Accordingly, with this news and the prospects of the special dividend, share consolidation and pension deficit pay down plus onward progression, we welcome the combined developments and reiterate our 'buy' recommendation on what we deem to be lowly valued Tesco's shares,”
i agree, nothing finalised and i'm sure shareholders if given the chance will vote for cash!
Hi Webba3
I also have not seen anyone mention a share buyback scheme for Tescos. That quote from proactive doesn't mention a buyback policy.
Any chance you could post or share a link to an article or news item that mentions this ?