I’ve a confession to make about Tesco (LSE: TSCO) shares. On 28 February, I referred to as the grocery big the last word ‘Steady Eddie’ FTSE 100 inventory.

I complacently wrote: “I don’t hold Tesco, but wish I did. Watching its steady, solid progress is like being given a cosy back rub after a stressful day.”

Oh expensive. That hasn’t aged properly. Lower than a month later, watching the Tesco share price is extra like being jabbed with a pointy stick. As an skilled long-term investor, I ought to have recognized higher than to imagine Tesco’s resurgence would proceed uninterrupted.

Can this FTSE 100 star shine once more?

The ache was delivered on 14 March, and from an sudden supply: underpowered rival Asda. Regardless of Asda being the UK’s third-largest grocer with only a 12.6% market share, it’s abruptly spooked all the sector. Tesco, by comparability, leads with 28.3%, however that hasn’t stopped its share price taking a success.

Asda’s trying to revive its fortunes by slashing costs, even on the expense of denting short-term profitability. Traders now concern one other grocery store price battle, which might hit margins throughout the sector.

Tesco shares slumped 6% on the day, as did Sainsbury’s. One week later, Tesco’s down a hefty 12.97%. Somebody who had invested £10,000 simply earlier than this is able to now be sitting on £8,703, a painful paper lack of £1,297.

No person likes to see a sudden drop of their portfolio. However the shares are nonetheless up 13.5% over the previous yr and 48% over 5 years, with dividends on prime. The retailer has the resilience to recuperate, although it could take time.

The broader financial local weather stays powerful although. Inflation’s proving sticky, customers are feeling the pinch, and financial development is slowing. Tesco will want all its strengths, comparable to scale, model loyalty and operational effectivity, to climate the newest storm.

This inventory now seems higher worth

The shares now look first rate worth with a price-to-earnings ratio of 13.7. The latest dip has additionally nudged its dividend yield to a barely extra interesting 3.73%.

Analyst forecasts nonetheless recommend a stellar yr. The 13 brokers forecasting Tesco’s one-year share price produce a median goal of 410p. If right, that’s a possible acquire of round 27% from at present’s price. Add within the dividend yield, and the overall return might exceed 30%.

I’ve a number of issues to say about that. First, forecasts are slippery issues. Second, most of those have been in all probability made earlier than the Asda bombshell and might be revised down.

Tesco’s latest tumble is a reminder that even Regular Eddie shares can face short-term turbulence. Whereas I don’t anticipate a fast rebound, I nonetheless imagine this dip presents a possibility for long-term traders in search of a robust, market-leading firm at a greater price to contemplate.

Simply don’t anticipate a pleasant cosy again rub. Traders should all the time anticipate short-term volatility and, in reality, that’s an excellent factor too.

When shares dip, re-invested dividends will decide up extra inventory on the decrease price. Plus dips additionally throw up potential shopping for alternatives for far-sighted traders. LIke Tesco, at present.