Saturday, July 19, 2014

Tesco new initiative will be positive for growth and earnings

Shares in big supermarkets may not provide huge growth but they do provide spectacular dividends. Despite their ups and downs my shares in Tesco have netted me almost half their value in dividends over time making them one of my best share purchases ever. But Tesoc and other majore brands are being threatened by Aldi and Lidl and that has caused worry and of course worry means shares drop.

Today Tesco announced a new venture, house building and I am convinced that while this sounds odd it could lead to a big increase in shareholder value. Tesco owns a lot of land and the UK is desperate for housing. If they build following their brand concept of value for money then these houses will all sell immediately and make Tesco a huge windfall. According to the article 15-20,000 homes potential. This makes about £60m profit by my guesstimates.

Tesco is planning to build 4,000 new homes in the UK on land previously earmarked for new supermarkets.

Britain’s biggest retailer has dramatically scaled back its expansion plans in the UK and now plans to use some of its vast landbank to build homes.

Telegraph 19/7/2014

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