5) Tesco (TSCO)

Tesco remains a favourite among our clients, maintaining as it is the biggest share of the UK (super) market and despite underperforming J Sainsbury (SBRY) over the past 12-months. Heavy restructuring while maintaining a decent market share cushion is a boon for shares fundamentally, indicating that Tesco may be undervalued from thet perspective.

On a technical level, what’s attractive about Tesco stock is that it tends to trend more (i.e. shares are a bit less volatile) than those of J Sainsbury, potentially making it a less risky play when trading both long and short. Bulls are encouraged by price action around the 50-week moving average, a decisive break above which would signal a major challenge to the 3 year downtrend, while a potential target at the 100-week moving average lurks about 11% higher.

Bears, on the other hand, will point towards overbought technicals and waning volume (divergent with the 2016 rally). While prices can fall irrespective of trade volume, they can only keep rising when volume itself is increasing. In that case, and given the significant hurdle presented by the shorter term moving average, a retreat back towards £1.50 could be on the cards.

Do you think shares in Tesco will rally up to the highs of 400p or fall back towards the lows of 135p?

Broker Consensus (Source: Bloomberg, 1 Apr)

Brokers are largely bullish in terms of rating with 77% saying either buy or hold. With target prices sitting evenly above and below current levels, we could see target price revisions (at the very least) in the coming days or weeks. You can be kept up to date with broker consensus on all your favourite stocks via the Accendo Research App by signing up for our free research trial here. You’ll have full access for two weeks.