How to Buy Tesco Shares UK [2024]

Do you want to invest in the stock market but are worried about economic uncertainty? Consider investing in a company equipped to thrive in all market landscapes, such as Tesco, the UK’s leading grocery retailer.

Keep reading as we analyse the most important facts about the supermarket chain, explain how to buy Tesco shares in the UK, and provide an overview of the most reliable brokers to use.

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What is Tesco?

Note

Tesco plc (LSE: TSCO) is a British multinational grocery and general merchandise retailer headquartered in Welwyn Garden City, England.

The company stands as one of the leading grocery retailers in the UK, with a market share of over 26%, and is recognised as one of the “big four” supermarkets alongside Asda, Sainsbury’s, and Morrisons. In fact, Tesco is one of the most valuable brands in the United Kingdom and among the top five food and beverage retailers in Europe.

Leading UK brands in 2022 by brand value. Source: statista.com

Tracing back to its roots in 1919, Tesco emerged from the entrepreneurial endeavours of Jack Cohen, who set up a modest stall selling war-surplus groceries in London’s East End. The enterprise has since diversified its operations, not just geographically, but also across various retail sectors, including books, apparel, electronics, and toys. Beyond merchandise, Tesco also has a presence in financial services, telecoms, and internet services.

In a strategic shift in the early 1990s, Tesco re-positioned itself from a low-cost retailer to one catering to a broad socio-economic demographic by offering a spectrum of in-house brand options, ranging from budget-conscious “Tesco Value” products to the premium “Tesco Finest” selection.

It operates a number of different-sized stores, with Tesco Extra at one end of the spectrum, which are larger supermarkets that stock nearly all of Tesco’s product ranges and a large range of non-food goods, to ‘One Stop’ stores that act as small convenience stores.

Tesco operates across various store sizes, from large-scale Tesco Extra supermarkets to the smaller ‘One Stop’ convenience stores. As of 2024, Tesco’s global presence extends to 4,859 locations, including franchised outlets. Of these, over 3,700 are strategically positioned within the UK, reaffirming the brand’s strong domestic presence. Notably, Tesco’s store count is significantly higher than its competitor, Sainsbury’s.

Tesco trades on the London Stock Exchange (LSE) under the ticker TSCO and is a constituent of the FTSE 100 Index.

Where to buy Tesco shares?

Thanks to an abundance of online brokers, like eToro, buying shares in your favourite companies is as easy as ordering takeout. In fact, purchasing shares in Tesco, and investing in stocks in the UK at large, only entails a few straightforward steps.

That said, choosing a broker that aligns with your specific needs, including your investment goals and trading style, is instrumental in facilitating a seamless trading experience.

With these factors in focus, let’s unpack the process step-by-step.

How to buy Tesco shares? Step-by-step process

As a publicly-traded company, investors can purchase shares of Tesco through a regular retail broker. The following section will offer an in-depth overview of the step-by-step process as well as our recommendation for specific platforms to use.

Step 1: Choose a broker

As mentioned above, to buy Tesco shares online, you’ll need a brokerage account. Your ideal platform should match your investment style (long-term buy-and-hold strategy or active day trading) and needs (e.g., whether you wish to trade more advanced financial vehicles like options). When assessing brokers, here are some crucial characteristics to take into account:

Fees: Brokerage fees are a type of fee collected by brokers to execute your transactions or provide specialised services. Fortunately, today, the vast majority of online brokers offer commission-free stock and exchange-traded funds (ETF) trading;
Security: Choose a trustworthy broker by ensuring it is fully authorised and regulated by the Financial Conduct Authority (FCA);
Trading tools: Active traders may prefer brokerage accounts with all the bells and whistles. Some brokers offer fully customisable platforms with comprehensive analysis tools or access to additional data for an extra cost. If such additions are unnecessary for your purposes, avoid paying extra for them. It’s typically a good idea to look for a user-friendly platform with a competitive fee structure if you are new to stock trading. A dedicated section with investing tips and tricks is a bonus;
Access to market data: Look for a platform that offers solid market research and reporting tools to help you trade confidently with updated data;
Fractional stock trading: Fractional shares enable investors to buy stocks or ETFs by the dollar amount, which is particularly valuable for investors with limited capital and the desire to build a diversified portfolio or investors looking to set up a dollar-cost averaging (DCA) strategy.

Top picks

To securely invest in Tesco and buy TSCO stock, consider these brokers:

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2. Interactive Brokers (IBKR)

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Step 2: Fund your account

Once you’ve decided on a broker and set up an account, you can fund your account. Various deposit methods will typically be available to you, including linking a bank account directly, using a debit, credit, or prepaid card, or opting for a third-party payment service such as PayPal (PYPL).

Remember, it can sometimes take up to three days for the money to reach your account.

Step 3: Research the company

As a publicly listed company, Tesco’s annual earnings reports, shareholder presentations, as well as recent press releases can be acquired directly from its investor relations section.

In addition to offering insight into Tesco’s financial stability and future strategies, these reports also shed light on potential challenges the company, or even the entire industry, might face, including disruptions in the supply chain, employee retention, sustainability pledges, and intensifying market competition.

Step 4: Decide how much you want to invest

So, you want to buy Tesco shares. Next, you must determine how much to invest.

How much you invest depends on various factors, such as the current stock price and the number of shares you wish to acquire. If the stock’s price is financially out of reach, don’t panic – consider fractional shares. With fractional shares, you can purchase a portion of a share at the exact cost that matches your budget.

Remember, however, that given the inherent volatility of the stock market – results are never guaranteed. Therefore, only invest what you are willing to lose and carefully evaluate the level of risk you’re prepared to take on.

Step 5: Place your order and buy Tesco shares

After deciding the number of shares or the sterling amount of shares you wish to acquire, it’s time to place your order. Simply log into your broker account and enter the ticker TSCO in the search bar.

You’ll have two execution options:

Market order: An order to buy shares at the current market price, typically executed instantly (subject to availability);
Limit order: An order activated once the stock hits your specified price. For example, if you wish to buy TSCO stock at £250 or below, you’d set the limit price at £250. The order will then be fulfilled once the share price drops to £250 or lower.

Invest in TSCO with index funds

Make sure to balance risk and reward in your portfolio by diversifying your holdings. One of the easiest ways to accomplish this is by investing in ETFs. Conveniently, since Tesco is a component of the FTSE 100, it’s included in any ETF tracking that index.

Step 6: Monitor your investment

While a passive approach might be appropriate for a diversified portfolio of ETFs, investing in individual companies like Tesco demands a more hands-on strategy.

Start by periodically checking the stock price, providing immediate insights into its short-term performance. More importantly, however, consider reviewing the same quarterly and annual reports you used in your preliminary research for a more comprehensive understanding.

Additionally, it’s imperative to keep abreast of news surrounding the company and its industry, as external elements such as market dynamics, legislative shifts, and economic pointers can markedly influence its performance.

Finally, conduct regular evaluations of your investment strategy in light of this information, making necessary adjustments to align with your findings.

Bonus step: Track the performance of market competitors

Monitoring competitors’ performance in the retail sector, such as Walmart (NYSE: WMT), Amazon (NASDAQ: AMZN), and Dollarama (TSX: DOL), can serve as valuable points of comparison.

Should I buy Tesco shares?

Whether investing in Tesco is the right choice for your investment portfolio depends on your risk tolerance and investment goals.

In addition to examining the company fundamentals, you can use technical analysis to evaluate the stock and identify trading opportunities in price trends and patterns seen on charts.

The gauge displayed here represents the real-time technical analysis overview of Tesco for your specified timeframe (in this case, one day). It can simplify trading decisions (subject to your proficiency in technical analysis) by demonstrating the real-time recommendations of popular technical indicators such as moving averages and oscillators.

Disclaimer: TradingView does not recommend trading financial instruments based exclusively on the advice of the Technical Rating indicator. These recommendations cannot predict future movements and are meant as assistance for spotting potentially favourable buy/sell conditions if this is consistent with their strategy.

Common mistakes to avoid when investing in the stock market

Some of the most common mistakes to avoid when investing in the stock market include:

Not conducting thorough research on the stock;
Lacking well-defined financial goals;
Trying to time the market;
Not diversifying your investments across a variety of sectors or asset types;
Allowing your emotions to dictate your investment decisions.

Have a look at our guide on the most common investing mistakes for a more in-depth overview as well as advice on how to steer clear of such mishaps.

How to sell Tesco shares?

You can sell your shares if you see Tesco performing differently than expected or after reaching your desired financial goal.

To do this, simply log on to your broker account, navigate to the stock’s detail page, input the number of shares or the sterling amount you want to offload, and tap sell.

Pros and cons of buying Tesco shares

Before you buy shares of TSCO, take into account both the pros and cons of Tesco’s business:

Pros

Market position: Tesco is one of the largest grocery retailers in the UK with a substantial share of the market, providing a stable base for continued profits;
Diversified product offerings: Tesco’s operations are not limited to food retailing, helping to spread risk. In fact, it has diversified into clothing, electronics, financial services, and telecoms;
Global presence: Although Tesco’s primary market is the UK, it has operations in other European countries, offering additional avenues for growth;
Income-generating: Tesco is a dividend-paying company with an annual dividend yield of 3,73% (as of January 3, 2024).

Cons

Fierce competition: The UK supermarket sector is highly competitive. Tesco faces strong competition from other ‘big four’ supermarkets (Asda, Sainsbury’s, and Morrisons) as well as German discount retailers like Aldi and Lidl;
Economic sensitivity: As a retailer, Tesco’s sales can be affected by the overall economic environment. Recessions or economic downturns may result in reduced consumer spending.
Reputation risk: Tesco has faced some reputation-damaging incidents in the past, most famously the horse meat scandal of 2013. These kinds of events can impact customer trust and, subsequently, sales;
Labour shortages: The sweeping wave of resignations deemed the “Great Resignation,” fuelled by the COVID-19 pandemic and further exacerbated by the escalating cost of living crisis, has witnessed a significant exodus of retail workers. In tandem, Brexit has had considerable implications on labour availability following alterations to immigration laws. All of this has resulted in a discernible contraction in the labour pool and may adversely affect Tesco’s operations.

In conclusion

In conclusion, acquiring shares in Tesco presents a compelling opportunity to tap into the fortunes of one of the UK’s leading retail powerhouses. The company’s robust market presence, diverse product range, and strategic geographical outreach lend it significant stability and potential for growth.

However, as with all investment endeavours, it’s crucial to remain mindful of the potential risks. Recognise the retail sector’s competitive nature, as well as the influence of consumer trends and the economic state overall.

Investing in Tesco, like all stock market investments, should align with your overall financial goals, risk tolerance, and investment horizon. As you aim for returns, manage risk by diversifying your holdings and regularly balancing your portfolio.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about buying Tesco shares