Tesco

Tesco is the biggest supermarket chain in the UK. At heart it is a UK-based grocer, but it has diversified internationally, with large operations in Europe and Asia, and by sector, with a large part of its revenue now coming from petrol, household goods, electronics, clothes, financial services, etc.. Despite this, Tesco's UK grovery operation is still responsible for about 50% of its revenue.

Tesco attracted me in a number of ways:

• A return on equity of about 15%, which should give it a strong basis for growth from reinvested earnings
• A history of strong growth - about 13% a year - confirming the benefit of the high RoE
• Conservative capital structure - about £6bn of net debt
• Very stable revenue and earnings
• High margins compared to its competitors

I have so far bought two tranches of Tesco shares, at an average purchase price of 340p. I am pondering buying more.