Tesco (TSCDY) has a chance to do what many thought impossible: knock Wal-Mart from its throne as the number-one retailer.
Tesco is the king of supermarkets in Britain. It’s the reigning grocer, and like Wal-Mart, also sells household appliances, equipment, flowers, clothing and electronics. And the company also owns gas stations and financial service firms.
Additionally, just like Wal-Mart has done so successfully, Tesco has been a technological pioneer. In fact, I believe that’s an area where they have at least one big advantage over Wal-Mart.
Today, Tesco is not only the number-one retailer in the U.K. (with 34% of the market) and the globe’s third-largest retailer overall, but the company is the top online grocery retailer in the world. And yes, it makes money from its online operations.
This is a terrific opportunity for Tesco because online grocery shopping is ready to come into its own.
Research firm IGD estimates this segment of the grocery market will be worth £5 billion in 2012 and double in only five years. Tesco should be the big winner here.
5 Reasons To Invest In Tesco
Here’s a quick summary of all the reasons I like Tesco:
- Proven ability to grow sales in good and bad times.
- Customer knowledge gives them an edge in target marketing.
- International expansion is proving very profitable.
- Strong foundation in online grocery segment that is only going up.
- Increasing earnings estimates and analyst upgrades.
We normally stick to stocks trading under $10 because they often rise the fastest and the farthest, but I think Tesco is too attractive to pass up and has a good chance of eventually doubling. We’re up nearly 30% in the stock, and are eying our initial target of $20, subject to an upward revision once the recession works its way through the global economy.
As with our other Buried Treasure stocks, I’m keeping our buy limit tight for the moment because I don’t want my readers taking on undue risk in this volatile market.
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