Tesco Shares Have Reached A Peak

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Tesco Shares Have Reached A Peak

Tesco Shares Have Reached A Peak?

Tesco (LSE:TSCO) made a new high in December 2024, a level that wasn't seen since 2014. Since then, the Tesco stock has been struggling to get past that level & has actually moved lower.

Over all, Tesco (LSE:TSCO) stock made a rally of almost 21% in the last year. Now, some investors are saying that the Tesco shares have peaked and its golden days are long gone now.

Delicate Inflation Situation In Uk

Right now, the inflation situation in the UK is also very delicate. We can either get strong growth and low inflation, or the inflation moves higher to prevent the rate cuts from happening. And when we talk about shares like Tesco, we can't look at them without inflation.

boom period means that Tesco consumers will cut back on spending and opt for sending to higher-end stores. On the contrary, the customers will try to look for better deals in case of recession. The bottom line is that Tesco's revenue will take a hit either way.

It's also worth mentioning that the supermarket share of Tesco also jumped to 28.5% recently. Now, that's one of the highest levels only last seen during the year 2016 and shows a solid comeback. But, this also means Tesco will struggle to continue the momentum and that may be found as off-putting for some investors.

Despite all of this, Tesco (LSE:TSCO) shares are still very attractive and not overvalued at all. The P/E ratio of Tesco (LSE:TSCO) is at 15.5, which is similar to the numbers from FTSE 100.

The bottom line is that Tesco (LSE:TSCO) is far away from ending its golden days. In fact, Tesco (LSE:TSCO) is sitting at a pretty good spot and has a lot of potential for growth in the year 2025. So, it's safe to say there is no major risk for Tesco (LSE:TSCO) during the next quarters.

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