Sorry sale of Tesco

What do you do when a stock you love reaches your price target? You let your head rule and sell some of course.

All price targets must have a date to be meaningful, and I decided that if Tesco reached 400p this year it would be fully valued and some profits should be taken. So when Tesco passed this milestone last week I sold half my holding for a 25% profit.

The 25% gain has occurred during the last 5 months and it is hard to understand exactly why investor sentiment has changed so much. Tesco has great management, great defensive qualities, a share buy back and the possibility of some of their property assets being liquidated and returned to shareholders. However the forward PE is now over 16 and growth is 11%. That is a rich valuation in my book.

Will Tesco continue to rise from here? Quite possibly but if it does I still have some exposure to it. And if it falls I can accumulate some more at a more realistic price.

Tesco is a fantastic company but all companies have their price.