Tesco Is Defensive Stock

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Tesco Is Defensive Stock

Tesco Is A Good Defensive Stock

Tesco stock has proven itself to be an absolute monster, as the stock has gained 110% in the last 5 years. Also, Tesco pays dividends, which makes these returns even more impressive.

But how does Tesco continue to deliver these gains over the years? If we look back, it was not like that, and Tesco has made a lot of progress to be where it is today.

Back in 2014, Tesco was not in a good position as its sales, profits, and even its market share were falling. To make things worse, Tesco also lost 1.7 billion on its US business called Fresh and Easy. It's safe to say these were the darkest hours for Tesco.

Tesco's Free Cash Flow Remains Strong

During these difficult times, the CEO started the turnaround efforts, and now Tesco is back to its early glory once again. Tesco now enjoys a thriving business and continues to pull in customers with its initiatives like Aldi Price Match and Everyday Low Prices.

The like-for-like sales of Tesco are up by 3.5% and near 4.2% in the UK market. Also, the free cash flow of Tesco is around 1.96 billion with an increase of 11.8%.

Looking ahead, these numbers will get even better if Tesco can continue to maintain sales growth and strong capital management.

However, the one key risk for Tesco is the ongoing geopolitical tensions and the higher energy prices. These could lead to supply chain issues and higher inflation.

But with all things considered, Tesco is in a very good position. Also, Tesco knows how to handle the downturn as it has gone through difficult situations multiple times in its history.

The bottom line is that Tesco is a very good defensive stock and can deliver solid returns in the coming years. Last but not least, Tesco also pays dividend which makes it an even better option for the investors.

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