Just back from the weekly shop at Tesco. (I'm a modern man, clearly not that modern or I'd been doing it online!) I love the Clapham South store; it is definitely "under-shopped", always has been since it converted from a womens' hospital about 10 years ago, so the aisle's are empty and the checkout free. But I like it, adequate selection of groceries, (except sell buy dates can be a bit of a problem!). I try Waitrose now and again but frankly a rip-off, (and the sell buy dates are even worse, I only want to do this chore once a week!)

So where am I going to with this ramble. Some readers may remember I had a brief flirtation with Sainsbury in January last year but quickly cut my holding for a small loss and warned about the downside; well part of me thinks it's time to get back in; real wages are rising and valuations look more attractive (now dividends have been cut etc.) but I wouldn't:

Growth through store expansion is over.

Growth through margin expansion is over. There are a lot of pressures to come; the living wage, increasing rates and the discounters, (Lidl and Aldi) have not gone away.

I understand Tesco EPS forecasts for January 2016 are as low 4.6p , (shares are on 38x!) but why do people believe February 2017 will see growth given the headwinds on the cost front and from competitors.

Sadly, I think the lovely ladies on the checkout at Clapham South will pay the price. In 3 or 5 years time we will just push our trolley though a "gate" and with "FR" tags on each item will be presented with our bill. The companies are going to have to find cost savings somewhere!

But for now I think the sector is still a "value trap"! Tesco below 100p.

BTW I have no axe to grind; no short position or anything....just random thoughts.

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