The Coles Group Ltd (ASX: COL) share price is trading lower on Wednesday morning.
At the time of writing, the supermarket operator’s shares are down 1% to $17.90.
Why is the Coles share price falling?
The weakness in the Coles share price on Wednesday is likely to have been driven by news that major shareholder and former parent, Wesfarmers Ltd (ASX: WES), has been selling down its stake in the supermarket giant.
According to a report in the AFR, the conglomerate has sold a $500 million stake in Coles for a small discount to its last close price.
After the market close on Tuesday, Wesfarmers reportedly sold 28.2 million shares via a block trade at $17.75 per share. This represents a 1.8% discount to the Coles share price at yesterday’s close.
While neither company has confirmed the transaction, a big trade was made on Tuesday, which appears to back up the report.
For example, a total of 31,042,457 Coles shares were traded during Tuesday’s session. This compares to 1,789,401 shares on Monday and 2,571,330 shares a week earlier.
Should you buy Coles shares?
While Wesfarmers may be selling shares, one leading broker that believes investors should be buying them is Morgans.
Its analysts currently have an add rating and $19.70 price target on the company’s shares. Based on the current Coles share price, this implies potential upside of 10% for investors over the next 12 months.
Morgans is also expecting fully franked yields of 3.4% in FY 2022 and 3.5% in FY 2023. If we add this into the equation, the total return stretches to over 13%.
It commented: “Trading on 22.9x FY22F PE and 3.5% yield we continue to see COL as offering good value with the company possessing defensive characteristics and a strong balance sheet (1H22 net cash $54m) allowing ongoing investment for growth.”
The post Coles share price falls amid reports Wesfarmers is selling down its stake: Time to buy? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Coles right now?
Before you consider Coles, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Coles wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- 5 things to watch on the ASX 200 on Wednesday
- Here are the 5 worst-performing ASX hydrogen shares of the March quarter
- These are 2 of the most diversified ASX 200 shares
- Wesfarmers share price in the green amid overhaul news
- Humans don’t change: Expert names 2 ASX shares that exploit our urges
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 owns 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 Bruce Jackson.
from The Motley Fool Australia https://ift.tt/ahJX1Cb
Leave a Reply