Although they have started 2023 in a positive fashion, Wesfarmers Ltd (ASX: WES) shares are still down meaningfully over the last 12 months.
As you can see below, during this time, the conglomerateâs shares have lost 17% of their value.
While this is disappointing, one leading broker believes that this share price weakness could have created a buying opportunity for investors.
Big returns expected from Wesfarmers shares
According to a recent note out of Morgans, its analysts have the companyâs shares on their best ideas list with an add rating and $55.60 price target.
Based on where Wesfarmers shares are trading right now, this implies potential upside of over 17% for investors in 2023.
But it gets better! The broker is also expecting Wesfarmers to reward its shareholders with a $1.82 per share fully franked dividend this year.
This equates to a 3.85% dividend yield for investors, which stretches the total potential return to approximately 21%.
Why buy Wesfarmers?
The broker highlights that Wesfarmers is better positioned than most in the current economic environment due to its value offering. It points out that âKmart is well-placed to benefit with the average price of an item at around $6-7.â
Overall, Morgans believes that Wesfarmers shares are trading at an âattractiveâ level given the quality of its portfolio and strong balance sheet. It commented:
Trading on 22.5x FY23F PE and 3.8% yield, we continue to see WESâs valuation as attractive for a high-quality business with a diversified group of retail and industrial brands, solid balance sheet and strong leadership team that will continue delivering long-term value for shareholders.
All in all, this could make Wesfarmers one to consider if youâre looking for blue chip shares for your portfolio in 2023.
The post Want 17% upside plus dividend income? Broker says buy Wesfarmers shares appeared first on The Motley Fool Australia.
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More reading
- My top predictions for ASX 200 shares in 2023
- How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?
- My best ASX 200 dividend shares for 2023
- These are the ASX dividend shares to buy now: brokers
- 2022 was brutal for Wesfarmers shares. What now?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Wesfarmers. 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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