Is the Tesco share price getting a Morrisons boost?
The takeover battle for Morrisons has pushed its shares up 49% since the first bid emerged, and theyve gained 44% over the past 12 months. In the past few days, the Tesco share price has been picking up. I really dont think well be seeing any bids for Tesco. After all, were looking at the biggest company in the sector, already valued at over 18bn. It would be interesting to see someone having the courage to make a move though. But I do think the Morrisons saga has shown that the supermarket sector is probably undervalued. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air And if you click here well show you something that could be key to unlocking 5Gs full potential... If there is a next supermarket takeover bid, City talk suggests it could be for J Sainsbury. It has just reported a first quarter ahead of expectations. But thats not the reason the pundits think it might make a tasty target. No, Sainsbury has a property portfolio valued at around 10bn, which is quite a bit more than its market cap of 6.3bn. A different approach to valuation  That brings me back to Morrisons, and a warning from Legal & General Investment Management (LGIM) on Monday. According to The Guardian, a senior fund manager at LGIM said: If an acquirer makes strong returns this should come from making the company a better business. It should not come from buying its property portfolio too cheaply, levering the company up with debt, and potentially reducing the tax paid to the exchequer.  So maybe the bidders arent seeing Morrisons as an undervalued business as much as a cheap portfolio of assets. Morrisons shareholders will get their cash anyway. Eyes peeled for everything  Its reminded me to keep my eye on all aspects of a companys valuation. I might be tempted to focus on P/E and dividend yield. But that gives far from the whole story, and the balance sheet and asset situations are also key. Very often, were looking at a hefty negative balance sheet. So for me, businesses on attractive valuations but with big debts are to be avoided. I have no fears for Tesco there. In its 2020/21 results, Tesco reported property, plant and equipment assets to the tune of 17.2bn. In this case, thats just below the companys market cap. Its still another factor in valuing the Tesco share price, mind. I recently examined Benjamin Grahams famous maxim that in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine. I looked at what that means for long-term value investors. These latest developments remind me that I need to take into account all of the factors that might make a company attractive, to all manner of investors. And that a stock bought at an attractive valuation is almost always worth keeping for the long term. I do think the Morrisons saga could help investors to reappraise the Tesco share price.