Tesco (LSE: TSCO) has only made short sellers rich in 2014, with the sharesdown more than 40% since the start of the year.
Everybody else will be wishing they could return their stockfor a full refund, especiallyWarren Buffett, who lost $678m on Tesco in just three months.
So what does 2015 hold?
Year Of Destiny
Tesco is either the biggest contrarian opportunity the FTSE 100 has seen for some years, or the ultimate value trap. 2015 will almost certainly supply the answer.
If its the former, you need to screw up your courage and invest now, while its is still in the bargain bin. Tesco is trading at just 6.1 times earnings, against more than 15 times earnings for the FTSE 100 as a whole.
That price certainly looks tempting, given that its still the largest UK supermarket by far, with market share of 28.7%, according to Kantar Worldpanel.
Its share price is downfrom 29.8% one year ago, but the rate of losses have slowed.
Sales continue totumble, however, down 3.7% in the 12 weeks to 9 November.
Sectoral Slide
Its always much harder work turning a company round when the overall sector is declining as well. Kantars figures show that grocery sales fell by 0.2% over the last year, the first time that has happened since 1994.
Price deflation is expected to continue into 2015, although hopes are rising that wage growth will finally return to put more money into shoppers pockets, and make them feel less bitter about supermarket prices.
Aldi and Lidl will no doubt continue to gain share at the expense of Tesco, Sainsburysand Morrisons, but their breakneck growth cant continue forever.
2015 mayreveal that they have now scooped up the low hanging (temptingly priced) fruit.
Low Expectations May Help
The big question hanging over Tesco is what new boss Dave Lewis does. Daveis quietly knuckling down to the task in hand, rather than making grand promises, but he will need to show concrete progress next year.
Given the conveyor belt of bad news Tesco has delivered this year, including profit warnings and accounting scandals, even a slight improvement could have a dramatic impact on market sentiment.
Buying shares in Tesco is a leap of faith. A company this size really shouldnt be this risky, but it is. Tescos luck ran out this year, with even its rare successes convenience stores only succeeding incannibalising superstore sales. The stock is too risky for me, but I may be kicking myself in one years time. Do you feel lucky?
The FTSE 100 has been flat in 2014 but markets go in cycles and next year itcould start buzzing again.
Buying at times like now, when confidence is low, is just one way you canjoin the growing number of surprise UK millionaires who earned their wealth on the stock market.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of Tesco. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
