The Stocks and Shares ISA deadline is almost upon us. And time is quickly running out for investors to make the most of their £20,000 annual allowance. Don’t forget, once 5 April comes and goes, any unused allowance is lost forever.

But just how much money and wealth are investors potentially missing out on? Well, with just £5,000, it could be anywhere up to £7,000 in the next 12 months and perhaps up to £250,000 in just 10 years.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Building wealth in an ISA

Using something as simple as an index-investing strategy, a Stocks and Shares ISA can be used to generate substantial nest eggs. For example, the long-term average total return (capital gains + dividends) of the FTSE 250 is just shy of 11%. And if it were to deliver a similar gain over the next 12 months, a £5,000 ISA investment would grow to £5,550.

Earning over £125k entirely tax-free without having to lift a finger is obviously an exciting prospect. However, this is based on the assumption the FTSE 250 can deliver its long-term average return over the next 12 months and three decades. And lately, the UK’s growth index has struggled to deliver such gains. Yet, the story’s quite different for some of its constituents.

Until recently, Games Workshop (LSE:GAW) used to be part of the FTSE 250 family. But it was recently promoted to the FTSE 100 after almost a decade of smashing expectations. In fact, over the last 10 years, the stock’s generated an annualised total return of 40%. And with the Warhammer creator growing its share price by another 50% since March 2024, it hasn’t slowed its pace.

For an ISA, assuming the stock continues to rise at its average pace moving forward, a £5,000 investment today could be worth £7,000 by this time next year. And in the span of just 10 years, a £5,000 Stocks and Shares ISA today could grow to be worth over a quarter of a million pounds!

Taking a healthy pinch of salt

As exciting as the prospect of building a £250,000 nest egg sounds, the likelihood of Games Workshop continuing to deliver such jaw-dropping returns seems pretty low. After all, it would require the company to grow from its current £4.9bn market-cap to over £142bn – that’s quite a big ask from a plastic miniatures hobby company.

However, the stock market’s vast, and there are plenty of other businesses listed in London and abroad that have the potential to deliver similar returns in the long run. It’s just a matter of finding them – a task, admittedly, that’s easier said than done.

As for Games Workshop, while gargantuan gains may be a thing of the past, the company still has a lot of growth potential for investors to capitalise on. At least that’s what I think. Performance in 2025 has continued to be robust, with its new army launch boxes consistently selling out and profits beating internal expectations.

There are brewing concerns about the impact of US tariffs eating into profit margins, given that the firm exports worldwide from the UK. And the threat of at-home 3D printing can’t be ignored. But overall, I remain optimistic for this enterprise. That’s why it’s already in my portfolio.

The last few weeks haven’t been fun for investors who own shares in the US stock market. The S&P 500 and Nasdaq Composite have both entered correction territory, with these leading American indices falling by over 10% since mid-February.

And for individual stock pickers, the recent volatility has been even worse, with favourites like Tesla, Palantir, and ServiceNow (NYSE:NOW) losing around a third of their market-caps.

The growing uncertainty surrounding trade wars and geopolitical conflicts has investors on edge about the US economy. Specifically, fears are mounting that America could be heading into a recession. And since that would make life far harder for businesses to grow, it’s not exactly a surprise that growth stocks are being sold off in a panic.

However, as we’ve seen multiple times these past five years, crashes and corrections can be exceptionally lucrative. So let’s explore how investors can leverage today’s panic to try and get richer.

A record of recovery

Let’s take a quick glance at ServiceNow. In the 2020 Covid-19 stock market crash, the tech giant saw around 30% of its value wiped out in the space of just over a month. Then, skip ahead to the massive correction investors endured in 2022, the share price tumbled yet again, this time by almost 50%.

However, investors who sought to profit from the chaos and chose to buy at these lower prices are now sitting on pretty enormous returns, even after the recent sell-off. Buying during Covid would have earned a 238% return while snapping up shares at the end of 2022 led to a 120% gain. So with the stock now in freefall once again, is this a screaming buying opportunity?

Understanding the risk and reward

Blindly snapping up a growth stock that’s falling isn’t a winning strategy. In fact, there are plenty of shares that haven’t enjoyed the same rebound ServiceNow has. Instead, investors need to dig deeper to understand the long-term potential of a business and the risks it faces in trying to achieve its goals.

Since we’re already talking about it, let’s use ServiceNow as an example. The company’s core technology is about helping businesses become more efficient and productive through software automation. And a big part of its future growth story is the integration of new AI toolkits.

So far, the results from customers have been pretty encouraging. Now that management’s targeting the customer relationship management (CRM) market, ServiceNow’s preparing to take on industry titans like Salesforce and Workday. Needless to say, if it’s successful, then the group’s current $173bn market-cap could be just the tip of the iceberg.

Of course, success isn’t guaranteed. And if investors are expecting ServiceNow’s competitors to just sit idle while it steals market share, I think they’re going to be sorely disappointed. Even without this competitive threat, as more critical and sensitive customer information flows through its platform, ServiceNow’s likely to become an increasingly attractive target for cybercriminals. A failure to fend off cyber attacks could severely disrupt the firm’s progress.

Personally, with the valuation down so significantly, ServiceNow’s worthy of a closer look. But it’s not the only potential opportunity in the US stock market right now.

Down 24% year-to-date, WWP (LSE: WPP) is the worst performer on the elite FTSE 100 so far in 2025.

But it has an attractive 6.4% dividend yield and £1.2bn in cash flow. The resultant payout ratio of 78.3% more than covers payments.

It also looks undervalued with a price-to-earnings (P/E) ratio of 12.5. That suggests a decent amount of room for price appreciation – if earnings improve. With a net margin of only 3.68%, the business seems to be struggling with high expenses and low earnings. 

Sure, grabbing a few shares at this price could equate to a lucrative bit of passive income down the line. But if the company can’t find a way to boost profits, it may struggle to attract new investment.

Before I buy, I need to find out if the world’s largest advertising company has a future — or if cheaper digital options have taken over the market.

A global leader

WPP provides advertising, media buying, public relations, branding and data analytics to clients around the world. The company operates through well-known agencies like Ogilvy, GroupM, Wunderman Thompson and Grey.

It evolved from a shopping basket manufacturer when former Saatchi & Saatchi executive Martin Sorrell bought the company in 1985.

In the early 2000s, it began shifting into digital marketing to compete with major tech firms like Google. In 2013, it became the world’s largest advertising company.

Between 2009 and 2017, it dominated the market, with the share price soaring 366%. But after misconduct allegations forced Martin Sorrell’s resignation in 2018, things took a turn for the worse.

A stock in decline

The share price is now down 66.2% since a high of nearly £19 in late February 2017.

With strengths in TV, print, and outdoor advertising, it has struggled with the shift toward digital. Google, along with Meta, dominates this space, while WPP has struggled to maintain growth.

Most recently it’s faced several obstacles, including the loss of major client Coca-Cola to rival Publicis. The rise of artificial intelligence has been another challenge to its traditional media-buying model.

The economic slowdown in 2023 compounded these problems, with client budget cuts strangling revenue. Organic revenue decreased by 1% in 2024, prompting a weak outlook for 2025.

But it’s not all doom and gloom

WPP and Google Cloud recently established a partnership to integrate generative AI technology into marketing strategies. This collaboration aims to enhance marketing efficiency and effectiveness by combining Google’s expertise in data analytics and AI with WPP’s extensive marketing capabilities. 

The partnership will reportedly empower clients to create brand- and product-specific content, gain deeper insights into target audiences, predict content effectiveness and optimise campaigns. This is achieved by integrating Google’s Gemini AI technology into WPP’s Open Creative Studio. 

Is it worth it?

While the 6.4% yield is attractive, I wouldn’t say that alone is enough to justify an investment. The low P/E ratio has promise and if the Google partnership pays off, the price could recover well.

But until I see concrete evidence of that, I’m hesitant to buy. There are several other promising FTSE 100 dividend stocks like Aviva and HSBC with similar yields and more evident growth potential.

There’s a compelling case that Warren Buffett is the greatest investor of all time. The ‘Oracle of Omaha’ has embraced an unwavering commitment to value investing principles for decades, with tremendous success.

Recent S&P 500 turbulence has resulted in many billionaires experiencing drops in their wealth this year. But the Berkshire Hathaway CEO isn’t one of them, having made his pockets $23bn deeper in 2025. He’s now the world’s sixth-richest person with a net worth of $165bn.

Here are three pieces of investing wisdom I’ve learnt from Warren Buffett.

Invest for the long term

Buffett became a billionaire at 56. Over 99% of his wealth was accumulated after he turned 65. In case readers were in doubt, there’s hard evidence right there that a long-term investing approach can reap considerable rewards. That’s the Foolish way.

The reason for this is the power of compound returns. A well-chosen mix of stocks can generate exponential growth for investors with sufficient patience to endure the inevitable stock market dips, corrections, and crashes that will occur.

Adopting strategies like reinvesting dividends into more shares can aid this process. Although it’s tempting to spend cash handouts, investors who funnel distributions back into the stock market can be treated to a taste of Warren Buffett’s ‘secret sauce’.

Buy wonderful companies

Warren Buffett refers to “wonderful companies” as his ideal investments. Such firms have wide moats and are leaders in their respective sectors. Rather than obsessing over daily share price fluctuations, investors should understand the core businesses they’re considering.

Impressive management teams, consistent earnings growth, and strong cash flow generation are hallmarks of these stocks. Investors who can mimic a fraction of Buffett’s success at identifying great businesses will likely be handsomely compensated.

Manage risk

Understanding potential pitfalls is another important lesson. Stock market investing demands taking on risk. Enduring share price volatility is the price investors pay when seeking long-term capital growth.

Maintaining emotional discipline is essential. Instead of following unsubstantiated hype around the latest hot growth stock, it pays to be patient and wait for the chance to buy an undervalued stock.

Indeed, Berkshire Hathaway has doubled its cash pile to $334bn in a year. When Buffett’s busy building cash reserves, it suggests there are a lot of expensive stocks in the market currently.

Warren Buffett’s favourite energy stock

That said, one stock Buffett has been buying recently is hydrocarbon exploration business Occidental Petroleum (NYSE:OXY).

Investors had plenty to cheer in the company’s Q4 results. Oil production soared 18.5% from the previous year, reaching 1.46m barrels per day.

Furthermore, adjusted earnings per share (EPS) of $0.80 comfortably beat market expectations for $0.68. It’s also encouraging to see deleveraging efforts bearing fruit. A $4.5bn debt repayment means the balance sheet’s in better shape.

President Trump’s agenda to “drill, baby, drill” could bode well for Occidental’s future, considering 80% of its production is US-based. However, there’s a risk this could apply downward pressure on oil prices, which might hurt the company’s bottom line. Some analysts have also raised concerns about high decline rates for shale wells in the Permian Basin, which is vital to the business.

Nonetheless, with the stock trading for less than 13.5 times forward earnings, I can see why Buffett’s a fan.

Building a passive income in the stock market isn’t hard. After all, the London Stock Exchange offers a vast array of dividend-paying businesses for investors to pick from, and even investing in a passive index fund can immediately start generating income returns. But how much money can investors earn with just £5,000 of starting capital?

Crunching the numbers

Let’s start by exploring the index fund approach. Right now, the FTSE 100 offers an overall dividend yield of 3.54%. So an investment of £5,000 at this rate would result in an annual passive income of £177.

Obviously, that’s not a life-changing amount. But let’s not forget that the total return of Britain’s flagship index is usually around 8% — or at least that’s what the long-term historical average gain has been. Assuming this continues, dividends can be reinvested to grow the portfolio and generate more passive income in the future. And if left to run for 20 years, the initial £5,000 would grow into £24,634, generating an income stream of £872.

This result could be easily doubled by throwing in an extra £50 each month over the investing timescale. With a steady stream of fresh capital, an 8%-yielding portfolio would reach £54,085, or £1,915 passive income.

But what if we want to take this even further? Instead of an index fund, investors can choose specific companies offering a far more substantial dividend yield than 3.54%. For example, Phoenix Group Holdings (LSE:PHNX) currently pays out 10.2% in dividends – the highest in the FTSE 100.

At this rate, a £5,000 initial investment generates £510 in annual passive income – 190% more than the FTSE 100. And if this portfolio is also left to run for 20 years, even with no capital gains, it would grow to £38,123 (£3,889 passive income), or £77,091 (£7,863 passive income) with a £50 monthly contribution.

Needless to say, it’s an enormous difference.

Nothing’s risk-free

The prospect of having up over 77 grand in the bank, earning just shy of £8k a year without having to lift a finger, is understandably exciting. But just like a FTSE 100 index fund, it’s dependent on Phoenix Group continuing to pay a dividend without its share price tumbling into oblivion. And that’s far from guaranteed.

In fact, a big reason why the company offers such a high payout is because there’s a lot of uncertainty circulating the insurance enterprise. The company’s in the middle of a strategic transition to become a more broad-based pension provider. And apart from complicating the financial statements, management’s lack of experience in this domain is calling into question whether this decision will prove successful.

So far, the company appears to be on track, beating its cash generation target of £1.4bn-£1.5bn in 2024, delivering an impressive £1.78bn. That’s good news for dividend investors and certainly suggests its 10.2% yield’s a bargain opportunity. But with fierce competition mounting, the question is can Phoenix maintain this momentum?

Personally, I’m cautiously optimistic, making Phoenix worthy of a closer look. Of course, a single stock doesn’t make a portfolio. And investors will have to search for other potentially lucrative opportunities to build a diversified passive income stream.

A lot of the UK’s most popular shares are in the FTSE 100, but I think investors who overlook the FTSE 250 could be missing out on some potential profits. And with the new financial year here in a couple of weeks, I’ve been looking again for some candidates.

Ready to rebound?

Why is the ITV (LSE: ITV) share price struggling so much? It’s easy to point to declining TV ad revenues, but that’s only a part of it. The real uncertainty comes from the changing face of digital televisual entertainment. There’s intense compeition delivered through a multitiude of routes. And that, surely, can only continue.

The safety moat that a small number of big TV operators used to enjoy has dried up and was filled in long ago. Still, investors seem to be starting to take notice of ITV again. The share price has been recovering in 2025, boosted by full-year results on 6 March.

Cash cow

Despite the TV landscape upheaval, ITV’s still quite nicely profitable. CEO Carolyn McCall spoke of record profits from ITV Studios. She added: “ITVX has been the UK’s fastest growing streaming platform over the last two years.” And advertising has actually been going quite well.

Her update said: “The board remains committed to paying a full year ordinary dividend of at least 5.0p in 2025, which it expects to grow over the medium term.” And that keeps the yield over 6%.

ITV clearly still faces an unsure future, and that dividend can’t be guaranteed. But I suspect investors might have called the demise of ITV too soon. It surely has to be worth considering for the new Stocks and Shares ISA year.

Downtrodden retailer

The B&M European Value Retail (LSE: BME) share price has been through a strange five years. And it’s in a downward spiral again, losing nearly 50% in the past 12 months.

But I see another tempting dividend here, with a forecast yield of 5.5%. The discount retailer, best known in the UK for its B&M and Heron Foods chains, has a forecast price-to-earnings (P/E) ratio of only eight. That’s with earnings expected to grow over the next three years too.

In January, B&M lowered its full-year EBITDA guidance and that nudged the shares further down. But the change is relatively minor, with the previous range of £620m-£660m narrowed to £620m-£650m.

Profit from low prices

We mustn’t forget that this is a cut-price retailer. And one thing that means is that it’s not among the biggest-margin sectors in the FTSE 250. It also suggests it might not be the best kind of business to weather the ongoing economic storms.

Still, at Q3 time, CEO Alex Russo described the business as “undistracted by the current economic headlines“, and spoke of expected “positive volume growth across our ranges“. Oh, and the board announced a special dividend of 15p per share.

Again, this is a business going through tricky times. But again, I think it could be a mistake not to consider it.

I’m always hunting for high-quality FTSE 100 dividend — rather than growth — stocks. I’m a believer in the ‘bird in the hand’ theory — I’d rather be paid cash (in the form of dividends) now than wait for growth tomorrow.

Of course, long-term investing is about balance and diversification. The top dividend payers today may not be the same in 10 or 20 years’ time. Equally, dividend policies are subject to change that could quickly alter the balance of a portfolio.

However, there’s something to be said for large, stable FTSE 100 dividend stocks in defensive or non-cyclical industries. I’ve picked out two of my current favourites that investors should consider for some additional yield.

Industry-leading biotech company

GSK (LSE: GSK) is one of the FTSE 100 stocks I’ve got my eye on. Shares in the biotech/pharma giant are down 9.5% in the past 12 months and sitting at £15.14 as I write on 21 March.

The tariff war being waged by President Trump, combined with the threat of reduced HIV funding, have put the company’s valuation under pressure of late.

However, I do like GSK as a market leader in a non-cyclical industry that pays handsomely. Its shares have a dividend yield of 4%, above the Footsie average of 3.5%.

Another factor I like is size. GSK is a giant of the UK large-cap index with a £62bn market cap. Throw in its rich history as a dividend payer and it’s certainly one to look at.

I also like its shareholder-friendly policies. Management recently announced an additional £2bn is to be returned to shareholders within 18 months of its FY24 results date.

Of course, geopolitical risk is heightened for a multinational corporation such as GSK. Should we see further tit-for-tat tariffs, that could put more pressure on the share price.

That’s in addition to the long-standing risks facing market leaders in the industry such as uncertain drug trial success and unforeseen regulatory changes.

Top consumer stock

The other Footsie dividend stock for investors to consider right now is J Sainsbury (LSE: SBRY). The supermarket giant also boasts a track record of consistent dividend payouts and operates in a typically non-cyclical industry.

Groceries are a fiercely competitive business and margins are razor thin. There’s Tesco to compete with among many others trying to compete on product range and price.

However, Sainbury’s is a strong brand and boasts a £5.6bn market cap right now. When you consider the company’s current yield of 5.5%, I think it’s one that could have some merit.

It does carry significant liabilities on its balance sheet with a net debt position (including lease liabilities) of £5.5bn. Of course, the use of leverage can amplify return on equity for the company’s shareholders but increases the risk of financial stress or default.

The supermarket game can change quickly in the form of product shortages, new entrants and price wars. While I do think J Sainsbury’s higher yield can compensate for this versus peers, it doesn’t come cheap given a price-to-earnings (P/E) ratio of 34.

Verdict

These are just two of my current favourite FTSE 100 dividend stocks that I think are worth a look.

They each have a strong market position in typically defensive industries. That could make them good candidates to add some yield to a diversified buy-and-hold portfolio.

The Tesla (NASDAQ:TSLA) share price has been on a wild ride. Scratch that. The Tesla share price is a wild ride. Always has been.

Today, the stock’s screeching into reverse. Shares have plunged more than half from their December peak of $488, dragging Tesla’s market-cap down to $740bn. 

While that may sound hellish, it’s worth noting that this only takes the stock back to October 2024 levels. Despite the sell-off, the stock’s still up 36% over the past year.

Is this growth stock running on empty?

At times, Tesla seems overwhelmed by controversy. CEO Elon Musk’s growing political involvement has raised concerns about his focus on the company. Strange salutes and erratic social media behaviour haven’t helped.

But Tesla’s issues go deeper than politics. The company’s core electric vehicle (EV) business is slowing, with weak year-to- date deliveries . It’s just had to recall 46,096 Cybertrucks, which isn’t good.

Competition’s heating up, particularly from Chinese carmakers such as BYD. Its new ‘Super E-Platform’ allows cars to charge in just five minutes for a range of 250 miles. That’s more than twice as fast as Tesla’s Superchargers. Are we facing another DeepSeek moment?

But we need to zoom out a little. Tesla’s more than an EV maker. Its transformation into an artificial intelligence (AI) and robotics powerhouse is gathering pace. It’s blazing a trail in large-scale and residential battery storage. The robotaxi division’s expansion of full self-driving in China and Europe and Optimus robots (which can supposedly handle household chores) all offer new things to get excited about.

Some brokers reckon see recent slippage is a massive opportunity. Cantor Fitzgerald recently upgraded Tesla to Overweight and maintained its beefy $425 price target. That implies a massive 80% upside from today’s $236. Tesla has delivered that kind of growth before.

Oh, but the risks! President Trump’s trade war could go anywhere and it isn’t hard to imagine Beijing retaliating with tariffs on Tesla. Sales are down in Europe as some consumers recoil from the brand.

Another risk is that Trump’s administration scraps the $7,500 EV tax credit. That may seem unlikely, given Trump and Musk are such close allies. But that relationship could prove as volatile as Tesla shares.

The 42 analysts tracking Tesla have produced a median one-year price target of 369p, which suggests a blockbuster 56% gain from today. 

A stunning growth opportunity?

But many of these estimates will have been made before the recent sell-off, and with market conditions worsening, they may now be overly optimistic.

Alternatively, they may be alerting us to a brilliant buying opportunity, staring us right in the face. What’s that they say about tuning out the short-term noise?

Tesla’s an ultra-high-risk binary play. Nothing new there. It’s still expensive, with a price-to-earnings ratio of 115. That’s a huge premium to legacy automakers like the Ford Motor Company, which has a P/E of just 6.85. Nothing new there either. 

So should investors consider this a buying opportunity? Well, yes. Tesla’s a stunning company that’s suddenly available at a peak-to-trough 50% discount.

It has a history of defying expectations, and while it faces serious challenges, it also has significant growth avenues beyond EVs. This could prove to be a brilliant long-term investment to think about, but strong stomachs are required.

I’ve long been arguing that the Vodafone (LSE:VOD) share price underestimates the true value of the telecoms group. However, nobody appears to have been listening!

Well, maybe things are starting to change. That’s because since 4 February, when the share price closed at 65.1p, it’s risen 16.1% to 75.6p (at lunchtime on 21 March).

Although I’m a shareholder, I try to take a dispassionate view. There’s no point trying to kid myself if I know – deep down – that I made a mistake when I bought the stock. As Warren Buffett famously once said: “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

But whatever metric I use, I always come back to the same conclusion. Namely, that Vodafone’s market cap (currently £19.2bn) doesn’t accurately reflect its underlying value.

Crunching the numbers

Take earnings as an example.

The average historic (trailing 12 months) price-to-earnings ratio of 206 listed telecoms companies is 12.6. For the 12 months to 30 September 2024, Vodafone’s basic earnings per share from continuing operations was 8.87 euro cents (7.43p at current exchange rates). If the group was valued in line with the sector average, its shares would currently be changing hands for 93.6p. That’s a premium of 23.8% to today’s price.

It’s a similar story when the group’s balance sheet is considered. Using its latest published accounts at 30 September 2024, Vodafone’s price-to-book (PTB) ratio is just 0.38. For comparison, its closest rival on the FTSE 100, BT, has a PTB ratio of 1.3.

Finally, I believe the most recent transaction by the company supports my argument.

In January, Vodafone sold its Italian division for 7.6 times adjusted earnings before interest, tax, depreciation and amortisation, after leases (EBITDAaL). Analysts are predicting EBITDAaL of €11.02bn (£9.24bn) for the year ending 31 March 2025. Valuing the group on the same basis would imply a stock market valuation of over £70bn. Reducing this by the group’s debt would still suggest its current market cap is way below its intrinsic value.

Problems to overcome

However, despite my belief that it’s undervalued, the group continues to face some challenges.

As a result of a law change concerning the bundling of contracts, it’s losing domestic customers in Germany, its largest market. And its debt remains on the high side — telecoms infrastructure doesn’t come cheap. Competition in the sector is also intense.

Sceptics might also point out that the company’s share buyback programme is behind the share price increase, rather than a change in investor sentiment. The company’s bought just over 406m of its own shares since the start of February, reducing the number in circulation by 1.6%. I’m sure this will have had some impact on the price but I don’t think it explains all of the recent increase.

Calm down!

Yet despite the recent share price rally, I’m not getting too excited. A look at the group’s five-year chart shows that we’ve been here before. Many times, in fact.

At least it’s been trending in the right direction for the past six weeks or so. I’m therefore going to hold on to my Vodafone shares, hoping that more investors will soon value the stock as I do.

I have a confession to make about Tesco (LSE: TSCO) shares. On 28 February, I called the grocery giant the ultimate ‘Steady Eddie’ FTSE 100 stock.

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 dear. That hasn’t aged well. Less than a month later, watching the Tesco share price is more like being jabbed with a sharp stick. As an experienced long-term investor, I should have known better than to assume Tesco’s resurgence would continue uninterrupted.

Can this FTSE 100 star shine again?

The pain was delivered on 14 March, and from an unexpected source: underpowered rival Asda. Despite Asda being the UK’s third-largest grocer with just a 12.6% market share, it’s suddenly spooked the entire sector. Tesco, by comparison, leads with 28.3%, but that hasn’t stopped its share price taking a hit.

Asda’s looking to revive its fortunes by slashing prices, even at the expense of denting short-term profitability. Investors now fear another supermarket price war, which could hit margins across the sector.

Tesco shares slumped 6% on the day, as did Sainsbury’s. One week later, Tesco’s down a hefty 12.97%. Someone who had invested £10,000 just before this would now be sitting on £8,703, a painful paper loss of £1,297.

Nobody likes to see a sudden drop in their portfolio. But the shares are still up 13.5% over the past year and 48% over five years, with dividends on top. The retailer has the resilience to recover, though it may take time.

The wider economic climate remains tough though. Inflation’s proving sticky, consumers are feeling the pinch, and economic growth is slowing. Tesco will need all its strengths, such as scale, brand loyalty and operational efficiency, to weather the latest storm.

This stock now looks better value

The shares now look decent value with a price-to-earnings ratio of 13.7. The recent dip has also nudged its dividend yield to a slightly more appealing 3.73%.

Analyst forecasts still suggest a stellar year. The 13 brokers forecasting Tesco’s one-year share price produce a median target of 410p. If correct, that’s a potential gain of around 27% from today’s price. Add in the dividend yield, and the total return could exceed 30%.

I have several things to say about that. First, forecasts are slippery things. Second, most of these were probably made before the Asda bombshell and could be revised down.

Tesco’s recent tumble is a reminder that even Steady Eddie stocks can face short-term turbulence. While I don’t expect a quick rebound, I still believe this dip presents an opportunity for long-term investors looking for a strong, market-leading company at a better price to consider.

Just don’t expect a nice cosy back rub. Investors must always expect short-term volatility and, in truth, that’s a good thing too.

When shares dip, re-invested dividends will pick up more stock at the lower price. Plus dips also throw up potential buying opportunities for far-sighted investors. LIke Tesco, today.