Insights

Is the weakness in the Coles (ASX:COL) share price a buying opportunity?

The Coles Group Ltd (ASX: COL) share price has been among the worst performers on the S&P/ASX 200 Index (ASX: XJO) on…
The post Is the weakness in the Coles (ASX:COL) share price a buying opportunity? appeared first on The Motley Fool Australia. –

The Coles Group Ltd (ASX: COL) share price has been among the worst performers on the S&P/ASX 200 Index (ASX: XJO) on Thursday.

The supermarket operator’s shares were down as much as 5% to $16.14 at one stage today.

The Coles share price has recovered slightly since then but remains down 4% to $16.38 at the time of writing.

Why is the Coles share price sinking today?

The Coles share price has come under pressure on Thursday following the release of its strategy day update this morning.

While there were a number of positives in the update, such as its progress with cost cutting and sales density, investors appear to have reacted negatively to comments relating to its capital expenditure and depreciation.

Coles revealed that it is expecting its capital expenditure to increase to $1.4 billion in FY 2021, whereas its depreciation is forecast to rise to ~$1.7 billion.

What was the reaction?

A note out of Goldman Sachs reveals that its analysts have been running the ruler over today’s update.

The broker commented: “Supply chain and online upgrades have the potential to materially impact long term profitability for COL and materially change the competitive landscape. However, the medium-term costs from a capex, overlapping costs and D&A perspective are higher than previously expected, potentially taking some of the shine off the significant structural progress being made by COL.”

Is this a buying opportunity?

While Goldman Sachs may yet make revisions to its recommendation, for now the broker rates the Coles share price as a buy.

It has a buy rating and $20.50 price target on the company’s shares. This implies potential upside of 25% over the next 12 months excluding dividends. And if you include dividends, this potential return stretches to a sizeable 29% over the same period.

The post Is the weakness in the Coles (ASX:COL) share price a buying opportunity? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

Why Coles, Creso Pharma, Ramelius, & Whitehaven Coal are tumbling lower

ASX 200 down 0.3%: Coles and Challenger updates, gold miners sink

Coles (ASX:COL) share price on watch following strategy update
5 things to watch on the ASX 200 on Thursday

Top brokers name 3 ASX shares to buy today

James Mickleboro does not own any shares 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 shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!