Why did the Wesfarmers (ASX:WES) share price have such a great month in October?

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As it turns out, the Australian share market didn’t exactly have a fantastic month over October. The S&P/ASX 200 Index (ASX: XJO) ended up losing roughly 0.1% over the month that was. Yawn. But one ASX 200 blue chip share managed a far more impressive performance. That would be the Wesfarmers Ltd (ASX: WES) share price.

Wesfarmers shares had quite the month, as it turns out. This industrial conglomerate started October at $55.75 a share, and finished up last Friday at $57.58. That’s a healthy gain of 3.3% – and a vast outperformance of the broader ASX 200.

So what went so right for Wesfarmers over the month just gone?

Why did the Wesfarmers share price have such a strong October?

Well, we didn’t really see many meaningful updates or news from Wesfarmers over October. The company did release the Chairman and Managing Director addresses from its annual general meeting AGM) on 21 October, which my Fool colleague Mitchell dug a little deeper into last month. But there was not much in the way of new developments there.

Possibly, the largest piece of news out of Wesfarmers over October was the announcement that the company acquired a 19.3% stake in Australian Pharmaceutical Industries Ltd (ASX: API) from Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Wesfarmers has been pursuing a full acquisition of API for a while now. It currently has an offer of $1.55 per share on the table for the company, which has yet to be formally accepted or rejected by API. Even though Wesfarmers has said it will use this new stake in API to block a rival bid from Sigma Healthcare Ltd (ASX: SIG), this news didn’t seem to provoke much of a reaction from investors at the time.

Broker sentiment could also have played a role in Wesfarmers’ lucrative October. As my Fool colleague Tristan covered earlier in that month, broker UBS had rated Wesfarmers as a ‘buy’, with a 12-month share price target of $62. That implies a further upside of 5.9% on today’s share price of $58.56 (at the time of writing). Perhaps this too played a role in Wesfarmers’ strong month.

Whatever the real reason is as to why Wesfarmers shares enjoyed such pleasing gains in October, no doubt it has left a lot of shareholders very pleased by Halloween.

At the current Wesfarmers share price of $58.56, this company has a market capitalisation of $66.35 billion, a price to earnings (P/E) ratio of 27.8 and a dividend yield of 3.11%.

The post Why did the Wesfarmers (ASX:WES) share price have such a great month in October? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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