Insights

Why is the Wesfarmers share price beating the ASX 200 today?

Could Wesfarmers be an inflationary winner?
The post Why is the Wesfarmers share price beating the ASX 200 today? appeared first on The Motley Fool Australia. –

Inflation and interest rates are the talk of the town today, but they’re not putting a dint in the Wesfarmers Ltd (ASX: WES) share price.

In fact, the stock is in the green, alongside its home sector – the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ).

Right now, the Wesfarmers share price is trading 0.68% higher at $47.07. Meanwhile, the consumer discretionary sector is gaining 0.43%.

On top of that, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ), with which Wesfarmers closely aligns, is leading the market, gaining 0.94%.

For comparison, the broader S&P/ASX 200 Index (ASX: XJO) is falling 0.45%.

Could Wesfarmers be an inflation winner?

The Wesfarmers share price is outperforming the broader market on Tuesday as the Reserve Bank of Australia announces the result of its August meeting.

The entity has upped Australia’s official interest rate by 50 basis points to 1.85% in a bid to help control inflation in the nation.

But Wesfarmers might be better prepared than most to weather the effects of soaring inflation.

That’s because of its consumer staples-adjacent position.

Consumer staples can generally weather poor times because they are, well, staples. Customers can’t simply forego splashing out on necessities when times are tough.

That might be one reason Warren Buffett has allocated 10% of Berkshire Hathaway’s portfolio to the sector.

While Wesfarmers itself isn’t a ‘staple’ stock, many of its businesses arguably fit into the category.

For one, it holds a 2.8% interest in Coles Group Ltd (ASX: COL). The supermarket giant has been tipped as an inflationary buy by brokers.

Its retail brands like Bunnings and Kmart also sell plenty of products consumers need, rather than want. So does the company’s newly acquired Priceline business.

Thus, the Wesfarmers share price could be buoyed by today’s uncertainty.

Wesfarmers share price snapshot

Its conceivable potential as an inflation hedge hasn’t managed to save the stock over recent months.

The Wesfarmers share price is currently 21% lower than it was at the start of 2022. It has also fallen 24% since this time last year.

For comparison, the ASX 200 has dumped 8% year to date and 7% over the last 12 months.

The post Why is the Wesfarmers share price beating the ASX 200 today? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Wesfarmers Ltd right now?

Before you consider Wesfarmers Ltd, 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 Wesfarmers Ltd 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.

See The 5 Stocks
*Returns as of July 7 2022

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More reading

Morgans name 3 of the best ASX shares to buy in August
‘Recession-like levels’: Why ASX retail shares could still be in for a bumpy ride
From Cotton On to Catch: Wesfarmers’ plans to put its acquisition back on track
Own Wesfarmers shares? Here’s why Bunnings and Kmart are under investigation by the information watchdog
Broker names 2 blue chip ASX shares to buy now

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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