Insights

Why this top broker thinks the Woolworths share price is cheap

Woolworths shares could be great value after recent declines…
The post Why this top broker thinks the Woolworths share price is cheap appeared first on The Motley Fool Australia. –

The Woolworths Group Ltd (ASX: WOW) share price has taken a bit of a tumble in recent weeks.

Since this time last month, the retail giant’s shares have fallen over 10%.

This has left the Woolworths share price trading within touching distance of a 52-week low.

Is the weakness in the Woolworths share price a buying opportunity?

According to a note out of Goldman Sachs, its analysts think that investors should be taking advantage of this share price weakness.

This morning the broker has reiterated its buy rating and $41.70 price target on the company’s shares.

Based on the current Woolworths share price of $34.47, this implies potential upside of 21% for investors over the next 12 months.

What did the broker say?

Goldman has been busy looking deeply into the grocery industry in recent weeks and its channel checks have revealed that trading remains strong despite rising inflation.

It explained:

We have conducted a series of channel checks in the last 2 weeks with key grocery industry participants (FMCG suppliers, fresh wholesalers, freight and logistics solution providers, SimilarWeb online traffic update). Bottom line: we see continued resilience in the grocery space, where most players have not seen a noticeable change in consumer behaviour.

We are encouraged by the resilience and superior operations of WOW and reiterate our unchanged FY22-24e Sales and EPS CAGR of 6.9% and 14.9% respectively. We expect this to be driven by high price growth, well protected GPM and slight EBIT margin expansion as COVID costs roll-off and cost efficiencies continue.

In light of this, the broker feels that the recent weakness in the Woolworths share price has created a buying opportunity. Particularly given that its shares are trading at their lowest valuation premium to the Coles Group Ltd (ASX: COL) since its spinoff from Wesfarmers Ltd (ASX: WES) in 2018.

The post Why this top broker thinks the Woolworths share price is cheap appeared first on The Motley Fool Australia.

Should you invest $1,000 in Woolworths right now?

Before you consider Woolworths, 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 Woolworths 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

Tolls and phones: Wilsons unveils 3 ASX shares to buy for a slowing economy
Woolworths share price edges lower despite green milestone
Why did the Woolworths share price underperform on Thursday?
Own Woolworths shares? Here’s how the retailer plans to combat rising wage costs
How do ASX shares typically perform following a demerger?

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 has positions in 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 Scott Phillips.

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.

  • This field is for validation purposes and should be left unchanged.

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

Share With Your Friends

Free Share Allocation Reward Levels

STARTER

Class
$ 2,500 Deposit & Trade
  • REWARD^
  • 1 x Marathon Oil Corporation (NYSE:MRO)

ECONOMY

Basic
$ 5,000 Deposit & Trade
  • REWARD^
  • 1 x Pfizer Inc (NASDAQ:PFE)

ECONOMY

Standard
$ 10,000 Deposit & Trade
  • REWARD^
  • 1 x Amazon.com Inc (NASDAQ:AMZN)

ECONOMY

Plus
$ 25,000 Deposit & Trade
  • REWARD^
  • 2 x Apple Inc (NASDAQ:AAPL)
POPULAR

BUSINESS

Class
$ 50,000 Deposit & Trade
  • REWARD^
  • 4 x Apple Inc (NASDAQ:AAPL)

FIRST

Class
$ 150,000 Deposit & Trade
  • REWARD CHOICES^
  • 12 x Apple Inc (NASDAQ:AAPL)
  • 2 x Tesla (NASDAQ:TSLA)
^Please refer to the Free Share Promotion Terms and Conditions for details.

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, 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.

FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here To Get Started
FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here For More Info