The Coles share price just smashed its all-time high. Here’s why

a man in a supermarket strikes an unlikely pose while pushing a trolley, lifting both legs sideways off the ground and looking mildly rattled with a wide-mouthed expression.

a man in a supermarket strikes an unlikely pose while pushing a trolley, lifting both legs sideways off the ground and looking mildly rattled with a wide-mouthed expression.

It’s been a pretty poor day for the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. At the time of writing, the ASX 200 has lost 0.2% of its value and is back down to below 6,970 points. But it’s been a lot happier for the Coles Group Ltd (ASX: COL) share price today.

Coles shares are having a corker. The ASX 200 supermarket operator has gained a healthy and comprehensively market-beating 1.8% so far today and is going for $19.19 a share at present. But earlier today, Coles shares climbed as high as $19.28.

Coles share price hits new record high

That happens to be a new 52-week high for the Coles share price. It’s also a record high for Coles shares, being the highest share price Coels has climbed to since its demerger from Wesfarmers Ltd (ASX: WES) back in late 2018.

So how has Coles come to this happy occasion on a day that has been rather grim for most ASX 200 shares?

Well, it’s seemingly got nothing to do with anything out of the company itself, seeing as Coles hasn’t released any news or announcements this week.

However, we can point to a couple of factors that could be at play here today.

Along with its arch-rival Woolworths Group Ltd (ASX: WOW), Coles is one of the largest and most dominant consumer staples shares on the ASX 200.

Consumer staples companies are those who sell food, drinks and other household essentials. These kinds of companies are often touted as ‘safer’ investments due to the provision of these life essentials.

As we covered earlier today, the legendary investor Warren Buffett is fond of these kinds of companies, possibly for these reasons. Currently, around 10% of the share portfolio of Buffett’s company Berkshire Hathaway Inc is invested in consumer staples shares like Coca-Cola, Mondelez and Kraft Heinz.

Brokers put ASX 200 consumer staples shares in vogue…

2022 has delivered a sharp rise in uncertainty for investors as concerns over inflation and higher interest rates have taken off. As such, the appeal of companies in the consumer staples sector is arguably rising because of this.

That could be why the Coles share price has risen by more than 7% year to date in 2022 thus far, while the ASX 200 has fallen by more than 8%.

But a number of expert investors have been touting the defensiveness and inflation-resistant properties that Coles shares possess too, perhaps adding to this narrative.

As we covered just yesterday, ASX broker Citi has recently come out and reaffirmed a buy rating on Coles shares. That also came with a 12-month share price target of $21.

Explaining its rating, Citi stated that “mid to high single-digit inflation, expected to persist for at least the next 6 to 12 months, will drive sales growth for supermarket majors Coles and Woolworths”.

We’ve also recently covered how fellow ASX broker Morgans has a similar view. Morgans rated Coles shares as a buy as well, with a share price target of $20.65.

So it’s possible that Coles’ new record high today has also been influenced by these positive broker opinions.

Regardless, it’s certainly been a pleasing day for Coles shareholders.

At the current Coles share price, this ASX 200 consumer staples share has a market capitalisation of $25.64 billion, with a dividend yield of 3.18%.

The post The Coles share price just smashed its all-time high. Here’s why appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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