Tesco share price jumped to a decade high on Monday, continuing an uptrend that started in April when it bottomed at 302p. TSCO stock soared to a high of 435p, bringing its market capitalization of over £28.4 billion. 

Tesco is thriving and growing its market share

Tesco, the biggest retailer in the UK, has continued to grow its market share in the past few months. A recent report by Kantar showed that its market share rose to 28.4%, almost double that of Sainsbury’s, which has about 15% in share. 

Tesco’s market share is also much higher than ASDA’s 11.8% and Aldi’s 10.8. The company will likely continue growing its market share after the recent data showed that inflation in the country was rising.

Its market share is notable because analysts were expecting  Aldi’s price cuts to boost its market share, which has not happened because of Tesco’s price match strategy. Indeed, Asda has continued to lose market share i

A report by the Office of National Statistics (ONS) showed that the headline consumer inflation jumped to 3.6% in July, continuing a trend that has been going on in the past few months.

Tesco benefits from high inflation because it helps it boost prices, increasing its margins. Its scale helps the company to negotiate prices with suppliers, ensuring that its prices are lower than those of its competitors.

The most recent results showed that Tesco’s business continued thriving in the 13 weeks to May 24th. These numbers showed that its sales rose by 4.6% to over £16.38 billion, with the Republic of Ireland (ROI) experiencing the most growth at 5.5%.

The UK revenue rose by 5.1% to £12 billion, while Booker and Central Europe rose by 2% and 4.1%, respectively.

Most importantly, the growing revenue has pushed the company to accelerate its shareholder returns. It is in the process of buying back shares worth over £1.45 billion, a move that will continue to shrink its outstanding shares. It ended last quarter with 6.7 billion outstanding shares, down from over 7.67 billion in 2021.

The ongoing share buyback and the increasing dividends have helped to push its annual yield to 3.17%, making it a top company for dividend investors.

Tesco share price technical analysis

TSCO stock chart | Source: TradingView

The weekly timeframe chart shows that the TSCO stock price has been in a strong bull run in the past few months. It recently crossed the important resistance level at 387.3p, its highest point in February, invalidating the double-top pattern whose neckline is at 301p. 

The stock has remained above the 50-week and 100-week moving averages. Also, the Average Directional Index (ADX) has moved to 28, a sign that the momentum is continuing. 

Therefore, the stock will likely continue rising as investors target 500p in the coming week. A drop below the support at 387p will invalidate the bullish view.

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