Beginners' Portfolio: Three Shares In The News

Published in Investing on 12 December 2012

We take a look at recent news from companies in our portfolio.

This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.

Tesco

The recent news from Tesco (LSE: TSCO) has been the firm's third-quarter interim management statement, released on 5 December. Tesco's revamping of its UK "shopping experience" seems to be going well. Chief executive Philip Clarke told us:

"We've now refreshed nearly 300 stores, upgraded or introduced well over 3,000 products and added innovations such as Delivery Saver to our already successful online grocery business -- and there is plenty more to come in 2013."

Total group sales (excluding petrol) grew by 2.9% in the quarter, with UK sales growing 2.3%. However, overall UK like-for-like sales declined by 0.6%, though like-for-like food sales rose by 1.2%. Online sales did especially well, up 15%.

On the same day, Tesco announced that it is to exit the US market, where its Fresh & Easy chain just wasn't delivering. Tesco is good at knowing when to exit a market, as it did from Japan. Its other international operations are doing fine.

The update has helped Tesco shares, with the price now back up to 339p -- we bought at 305.5p.

BP

Not a great deal has happened to BP (LSE: BP) (NYSE: BP.US), for which we should probably be thankful considering most of the news over the past couple of years has not been among the best in the company's history.

Part of BP's response to the Gulf of Mexico disaster has been to dispose of a large chunk of its assets in order to raise the needed cash, and all that's really happened since our last news update is that the oil giant has completed another sale. This time, BP has sold a number of oil and gas fields in the Gulf of Mexico to Plains Exploration & Production for $5.5 billion, as agreed in September.

The BP share price has fallen a little further, and stands at 429.7p as I write -- down from our purchase price of 434.5p.

Rio Tinto

The miner in our portfolio, Rio Tinto (LSE: RIO) (NYSE: RIO.US) announced on 11 December that it has agreed to sell its 57.7% stake in the Palabora Mining Company for $373 million. The purchaser is a consortium of South African and Chinese business.

Unlike BP's, Rio's share price has risen recently, and at 3,305p, it is currently nicely ahead of our purchase price of 3,048p. A quick look at other miners, like BHP Billiton and Anglo American, also reveals recent rises, so we might just be past the bottom for the sector.

Where next?

My planned look at how to value the price-to-earnings ratio, with a specific view to a beginners' portfolio, has been a little delayed, but should come along before the end of the year. But first I'll take a look at how our watchlist candidates have been faring -- and maybe even add another couple to the list.

And then it will be time for a year-end update on the valuation of the portfolio.

And finally...

You can find the dedicated discussion board for the Beginners' Portfolio here. Hopefully, it will prove to be a useful forum for general discussions, which are hard to carry from article to article.

We also have some other resources that I would recommend to any beginner following this portfolio. We have two Motley Fool reports that I think are specifically useful for beginners...

The What Every New Investor Needs To Know report is key -- it's concise and pretty easy going. It covers some things that early articles in this series looked at, but with a slightly different perspective. Do click here for a free copy.

And you should get a copy of 10 Steps To Making A Million In The Market. It's motivational, and shows that it really is plausible to make a significant pile of cash by investing in shares for the long term.

Many people think the idea of making a million is just a pipedream. If you think that, click here for a copy and see if it changes your mind -- it will cost you nothing.

> Alan does not own any shares mentioned in this article. The Motley Fool owns shares in Tesco.

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Comments

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BigJC1 12 Dec 2012 , 2:19pm

I thought Tesco are reviewing their US business, do you know something the market doesn't ?

QuantumDealer 12 Dec 2012 , 4:41pm

Officially I think they are reviewing their US operations but that typically means a total closure/sale of US assets...hence why their Head of US departed so swiftly after the news broke. I am not sure why Tesco felt it necessary to compete in a market as competitive as the US in the first place.

jackdaww 12 Dec 2012 , 5:17pm

probably delusions of grandeur.

ANuvver 12 Dec 2012 , 9:14pm

But just imagine his Clubcard balance...
(Same bloke)

Working in a Buffett point (to be a good on-message commenter), he's just upped his BRK buyback threshold from 110% to 120% of book value.

TMFBoing 13 Dec 2012 , 3:22pm

I thought Tesco are reviewing their US business, do you know something the market doesn't ?

Tesco officially said it is "considering all options", but just about everyone has taken that to mean it is looking for the right exit.

Foolish best,
Alan
TMFBoing

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