Should you buy Wesfarmers stock before it pops?

The Wesfarmers Ltd (ASX: WES) share price hasn’t been doing too much ‘popping’ of late. Wesfarmers stock remains one of the worst-performing blue-chip shares in 2022 thus far.

The retail and industrial conglomerate is down more than 20% year to date, including today’s 1.1% drop to $47.66 a share.

This sustained fall in the value of the Wesfarmers share price over the past 12 months or so is a rather unusual occurrence in the company’s long history as an ASX share, as you can see below:

This company has historically been a top ASX blue-chip performer, and bounced back relatively quickly during the COVID crash of 2020, climbing back to its February 2020 highs by July of that year.

So by now, the value investors out there might be paying attention. Could this drop we have seen in 2022 be a buying opportunity for Wesfarmers shares? Is this company primed for a big pop next year?

Is Wesfarmers stock about to pop?

Well, at least one broker thinks so. As we covered earlier this week, ASX broker Morgans reckons Wesfarmers shares are primed for a popping. Morgans currently rates Wesfarmers as an add, with a 12-month share price target of $55.60.

If that were to be realised over the next year, it would represent an upside of 16.8% from where the shares are today. That would indeed be quite a popping, if Morgans is on the money.

The broker reckons Wesfarmers represents good value today thanks to its top-notch portfolio of Australian retailers.

Here’s some more of what Morgans had to say about its optimistic share price target:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy.

We believe WES’s businesses, which have a strong focus on value, remain well-placed for growth despite softening macro-economic conditions.

Morgans is also expecting Wesfarmers to keep its dividends rising over the coming years too. It is expecting a total of $1.82 per share in fully-franked dividends in FY 2023, rising to $1.89 per share in FY 2024.

So Morgans clearly thinks Wesfarmers shares are a bargain buy right now. But only time will tell if the broker’s assessment proves to be accurate.

In the meantime, the current Wesfarmers share price gives this ASX 200 blue-chip share a market capitalisation of $54.67 billion, with a dividend yield of 3.78%.

The post Should you buy Wesfarmers stock before it pops? 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 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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