For the past week, the Tesco share price has been trading above its highest level this year. The stock has jumped almost 10% since August. Tesco has a total market capitalization of £19.81 billion. Its main competitors, Morrisons and Sainsbury’s, have also improved in the past month.
Tesco is the largest retailer in the United Kingdom, followed by Sainsbury’s. It is also the third largest retailer in the world by gross revenues. Throughout the year, Tesco has been on several twists and turns. Nonetheless, the Tesco share price has jumped more than 18% from its lowest point this year.
Tesco has been in the spotlight in the past month, following the bid to acquire Morrisons. Tesco’s former chairman, Sir Terry Leahy, the current CEO of Morrisons, was among the top bidders in the process. However, the highest bidder was Clayton, Dubilier & Rice (CDR), a giant private equity firm.
There have also been speculations of Sainsbury’s takeover. Rumors stated that Apollo Global Management, a private equity firm, could be among the highest bidders for Britain’s second largest retailer.
As such, investors believe that Tesco could become an acquisition target as its main rivals are under acquirement. The British supermarket chain leader also has a modest valuation compared to its American peers like Amazon.
The Tesco share price will be in the limelight in September as investors closely watch the UK retail sales for August. Being the largest retailer in the UK, the outcome of the retail volume will impact the company’s share price. The retail sales data are expected to be released on September 17.
Tesco Share Price Outlook
The Tesco share price has been on a strong rally since the start of August. The stock was at a standstill on Thursday at 256.10p after hitting an intraday low of 254.10p.
On the daily chart, it is moving above the 25 and 50-day exponential moving averages. Its Relative Strength Index (RSI) has also been moving higher. However, with an RSI of 79, the stock is in the overbought region, hinting at an imminent sell-off period.
Therefore, the TSCO stock is likely to face a minor retracement before bouncing back. The next logical target will be the key resistance at 270p. Nevertheless, this view will be invalidated if the price moves below the 50-day EMA.