The Coles Group Ltd (ASX: COL) share price is down around 10% over the past two months.

Coles shares are today trading at $15.23 at the time of writing. Seeing as Coles shares were over $17 back in March, is this a buying opportunity for this ASX consumer staples giant?

Why are Coles shares falling?

Since mid-March, the broader S&P/ASX 200 Index (ASX: XJO) has surged over 22% in value. In this period, Coles’ share price has gone backwards. So what’s going on?

Well, Coles shares were one of the few stocks that investors were flocking to during March. Investors were evidently drawn to the company’s defensive qualities and were responding to the panic buying of essentials we saw across the country at the time.

Today, the situation is remarkably different.

The initial bump in revenue Coles experienced during the first quarter of 2020 has likely evaporated. We know this because just today, the Australian Bureau of Statistics released its April retail data, which found food retail spending fell by 17.1% in April, compared with March.

Meanwhile, most of the additional spending Coles has had to implement recently on safety equipment and extra store sanitisation looks like it’s here to stay for at least the remainder of 2020. Coles also employed a massive number of new staff over the last few months, which is another cost the company has to absorb.

Are Coles shares a buy today?

Coles shares certainly look a lot more attractive than they did two months ago, but I’m still not convinced they’re a screaming bargain on today’s prices. This is a company that I don’t think will see significant growth over the next few years. Its ‘Smarter Selling’ cost-cutting program has also had a major wrench thrown into it by the coronavirus.

In saying that, dividend income is hard to find on the ASX these days and so I think Coles shares have a lot of merit from an income investing perspective. On current prices, Coles shares are offering a trailing dividend yield of 2.76%, or 3.94% grossed-up with full franking.

That’s a lot better than a term deposit or a non-existent dividend from Westpac Banking Corp (ASX: WBC).

Foolish Takeaway

Coles is a good business with strong fundamentals and many attractive defensive qualities, which it certainly showed off during the market panic we saw in March with aplomb. I wouldn’t buy this company for its future growth prospects, but I think Coles shares remain a sound choice for reliable ASX dividend income today.

More reading

• $3,000 invested in these 3 ASX industries could make you a fortune in the future
• Aussie retail numbers paint a gloomy ASX picture
• The Bubs share price is up 20% in May, will it catch up to the A2 Milk share price?
• Why this ASX 200 stock could surge higher tomorrow
• Can we value ASX shares with P/E ratios in 2020?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Down 10% in 2 months. Are Coles shares a buy today? appeared first on Motley Fool Australia.

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Is the Webjet Limited (ASX: WEB) share price a buy?

Just over a week ago I looked at whether the Webjet share price was a buy. I concluded it seemed cheap if travel can return sooner rather than later. Since then it’s gone up about 12% in a week – that’s a quick return if you bought at the time!

I wasn’t expecting it to make such a quick double digit return. So I thought I’d revisit my thinking on the Webjet share price. Investment thoughts can change if something goes up or down over 10% in such a short time.

Why I was feeling bullish 

The company raised around $350 million in a capital raising which is being used to strengthen the balance sheet because of the travel restrictions that are in place globally due to the coronavirus. I think this puts the business in a much stronger position compared to a lot of its travel peers – Webjet should be able to easily survive to December 2020 even if strict restrictions remained. That alone was a boost to the Webjet share price. 

But the restrictions are lifting much earlier than expected. I believe international travel is nowhere close to coming back yet though. But the possibility of domestic travel has been brought forward with some other restrictions ending. The NSW government has said that people will be able to visit regional NSW. I think that’s very promising that domestic bookings could start again sooner rather than later.

I think Webjet also has an advantage in that it delivers its service online. That means it has a lower cost base and customers will still be able to access all of the options, it’s not like a closed physical travel agent shop.

Is the Webjet share price a buy now?

After a quick 12% rise from around a week ago I think I’d be inclined to take profits off the table today. The share market has returned an average of 10% a year over the decades, so making 12% in a week is an attractive return and I’m cautious about investors expecting too much from Webjet this year.

Hopefully it can keep rising and I still believe it could be a solid performer over the next 5 to 10 years, but taking profits off the table today wouldn’t be a terrible decision.

More reading

• Can we value ASX shares with P/E ratios in 2020?
• Why James Hardie, Oil Search, Webjet, & Westpac shares are jumping higher
• 3 industries that may never recover from COVID-19
• Why a buy and hold strategy for ASX shares is best
• Why Qantas, Webjet and these ASX travel shares are dropping lower today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is the Webjet share price a buy? appeared first on Motley Fool Australia.

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We all knew the Australian retail numbers for April 2020 would be bad. The coronavirus pandemic and subsequent economic shutdowns have literally closed thousands of shops and businesses around the country since March. For a few weeks, many Australians weren’t allowed to step foot into shopping centres.

But it’s always sobering when reality replaces the hypothetical and that’s just what has happened today.

This morning, the Australian Bureau of Statistics (ABS) released its official retail data for the month of April and the numbers weren’t too good.

A gloomy month for Aussie retail

According to the ABS, Australian retail turnover fell 17.9% in April 2020. That number is seasonally adjusted too and it’s the largest fall ever recorded by the ABS. Compared with April 2019, Aussie retail turnover was down 9.4%.

The ABS reports that every single industry reported falls, with food retailing; cafés and restaurants and clothing, footwear and personal accessories sectors hit the hardest. Turnover in these sectors was “around half the level of April 2019.”

Particularly of note was food retailing, which fell 17.1% in April following a strong rise in March. It appears consumers have stopped buying/hoarding record amounts of non-perishable food and household essentials that we saw in March when the extent of the coronavirus became apparent.

What do these numbers mean for ASX shares?

Unfortunately, there’s not a lot of good news for ASX investors in these numbers. Of course, most of us were expecting extremely dire numbers for April, but seeing them in the flesh isn’t a fun exercise, especially for anyone holding shares of retail-exposed companies, especially for shopping centre REITs like Scentre Group (ASX: SCG).

It’s not good news for shareholders of Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW), either. It shows that the panic buying that we saw in March was a ‘flash in the pan’ kind of scenario, and I don’t expect the new trends that we see in April to reverse for Coles and Woolies for the rest of the year.

I would suggest keeping on eye on the figures for May and June (once they’re released) for a clearer indication of what the future holds. April’s numbers were always going to be bad because consumers legally had to stay at home unless buying essentials. But it’s the figures that detail how Australians are shopping when we actually have the freedom of doing so that will really paint the picture of what the rest of 2020 has in store.

More reading

• Down 10% in 2 months. Are Coles shares a buy today?
• The Bubs share price is up 20% in May, will it catch up to the A2 Milk share price?
• 3 ASX shares that will have strong dividends in 2020
• 3 ASX 200 blue chip shares I would buy today
• 2 ASX 50 shares for retirees to buy right now

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Aussie retail numbers paint a gloomy ASX picture appeared first on Motley Fool Australia.

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