Tesco is undervalued. The UK's most admired company as voted by readers of Management Today last year is suffering the same fate as many blue chips in the wake of a boom in hightech and internet stocks.
But when Tesco results are announced on April 11, there should be nothing but good news.
Just consider what the company has been doing. This week rumours have been circulating that it is planning a takeover of Ahold the world's sixth biggest supermarket chain.
The rumours follow those circulating just before Christmas, when Tesco was touted as a suitor for Marks & Spencer.
This month, its share price has undergone a revival, lifting to 204.25p, a substantial improvement on last month when it dipped below the 160p mark.
In fact, shares hit a year high on March 24 at 211p, so they have dropped back slightly, leading to the question, why is it valued so cheaply?
David Stoddart, analyst with Investec, said: "As a fund manager, I will not be investing in supermarket stocks. While Tesco is doing better than other chains, it is still viewed as an old economy stock. It is suffering from deflationary pressures hitting margins, and with 1m sq ft of store space coming into the UK in the next year, it is only going to get worse.
"Even if it does take a lead in the internet home delivery race, this will only undermine its own superstores."
So, still want to invest in supermarket stocks come April 11?
{{NEWS }}
No comments yet