The Woolworths Group Ltd (ASX: WOW) share price has fallen 4.40% lower in 2020, but could it be back in the buy zone today?
Why the Woolworths share price could be a buy
The Aussie retailer’s shares had a reasonably strong start to the year and hit a new 52-week high of $43.96 in late February. That was the peak for most ASX 200 shares before entering a bear market in February and March.
The Woolworths share price has since fallen 20.95% from that 52-week high to $34.75 per share at the time of writing. Given the S&P/ASX 200 Index (ASX: XJO) is down 18.87% in 2020, the retailer’s shares are still outperforming the market.
While I think that Coles Group Ltd (ASX: COL) shares can outperform Woolworths in 2020, both retailers’ shares could be back in the buy zone. Australia is starting to ease coronavirus restrictions, but I think the supermarkets will still see strong sales in 2020.
That’s good news for shareholders and those looking for strong dividend shares this year. If sales remain steady in Woolworths’ core business, that means the retailer may be able to maintain its 2.97% dividend yield.
What about the downsides?
While the Woolworths share price may be in the buy zone, it’s not all sunshine and roses. There is still the ailing pubs business, Endeavour Group, that is under the retailer’s ownership.
The hospitality sector has been smashed by recent government restrictions. These measures have forced many to temporarily shut their doors and lay off staff to stay afloat.
Woolworths had flagged a sale of the recently merged pubs business but COVID-19 has thrown those plans into doubt. While this may not materially impact earnings for Woolworths going forward, it could place a question mark over the Woolworths share price valuation.
Foolish takeaway
I think Woolworths will continue to be a strong defensive buy in 2020. With a 2.97% dividend yield and a solid technical environment, the Woolworths share price could be good value, although I still think Coles shares could be a better buy.
If you’re still hunting for income shares in 2020, check out this top ASX dividend pick for the right price today!
NEW: Expert names top dividend stock for 2020 (free report)
When our resident dividend expert Edward Vesely has a stock tip, it can pay to listen. After all, he’s the investing genius that runs Motley Fool Dividend Investor, the newsletter service that has picked huge winners like Dicker Data (+92%), SDI Limited (+53%) and National Storage (+35%).*
Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.
This fully franked “under the radar” company is currently trading more than 24% below its all time high and paying a 6.7% grossed up dividend
The name of this dividend dynamo and the full investment case is revealed in this brand new free report.
But you will have to hurry — history has shown it can pay dividends to get in early to some of Edward’s stock picks, and this dividend stock is already on the move.
See the top dividend stock for 2020
*Returns as of 7/4/20
More reading
- 3 ASX 200 pandemic winners and 3 losers
- ASX 200 storms 1.2% higher: Cochlear reports 60% sales decline, Webjet jumps 22%
- Buy these 4 ASX shares to survive the pandemic
- 3 ASX 200 shares to watch this week
- Where to invest $20,000 into ASX shares for strong long term returns
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Is the Woolworths share price a buy? appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/35LTlB6
Leave a Reply