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Supermarket shares on a three for two deal

3rd October 2014 Print

If you follow the fortunes of the big UK listed supermarkets, you can’t fail to have noticed that they’ve been absolutely battered so far in 2014. This has proved to be something of an 'annus horribilis' for the three; Tesco, Morrison and Sainsbury’s. 

They’ve all been feeling the pinch of competition from a little further down the socio-demographic scale, shall we say. Specifically, stores including Lidl, Aldi, B&M Bargains, Hone Bargains and others have really been eating into the big three and presumably Asda too, though Asda is owned by American giants supermarket group, Wal-Mart.

The trick for anyone spotting an trading opportunity, of course, is in deciding whether or not the respective falls in the three’s share prices are overdone. By historical standards, each of the three is now effectively on a ‘three for two’ type of deal like the goods on their shelves – if not a BOGOF; “buy one, get one free”.

Tesco, in particular, has suffered after a couple of profits warnings. At the time of writing, Tesco’s shares are languishing around the 180p mark. They entered 2014 at roughly double that price. 

It’s a similar story at Morrison’s; the shares are now around the 160p type of mark, but they went over £3 per share as recently as autumn 2013. And Sainsbury’s relatively mild profits warning of early October saw their shares tumble to 230p. They were as high as £4 in November 2013.

Now the way the stock market analysis very often seems to work is that shares get cheered on when they’re already high and rising – and vice versa. As things stand, you can barely find an analyst brave enough to say the big three’s shares look undervalued, yet the opposite was true a year ago when the shares were all were twice as much.

Such is life; the market is full of brilliant hindsight economists and analysts and each person must make his or her own decisions and live with the consequences whether good, bad or indifferent.

That is what trading all markets is all about; some people are either plain lucky or really seem to have what it takes – others don’t. For many people, trading with Tradefair tools and platforms, using their own analysis is both fun and profitable. Many people are buying the big three supermarkets' shares believing in the “inevitable” bounce back, whilst others are seeing a paradigm shift in the whole nature of the UK economy and wouldn’t touch the shares with a proverbial bargepole.

So far, 2014 has been a wonderful year for those traders who thought shares in the three were over-priced at the start of 2014. Quite what will happen next is, of course, anyone’s guess. So are you feeling brave enough to put your money where your mouth is today? Because by the standards of the last decade or more – the shares are in the bargain basement on a three for tow deal – or maybe even better!