Supermarket giant COL is enjoying a strong 2023 helped by its first-half numbers which beat consensus in February, earnings (EBIT) jumped 14% to $1114m, 9% above consensus. The beat was driven by a strong supermarket outcome which saw gross margins up 43bps, the sector has returned to growth since the turn of the new year which supports a reasonable set-up to meet market expectations for the 2H although recent wage hikes will be a headwind moving forward.
- We like COL as a business but see little upside from $17.70 although its forecast 3.7% fully franked yield should remain supportive into weakness.
- In our Active Income Portfolio we already own Metcash (MTS) which is our sector pick unless we see pullbacks in the likes of Coles and Woolies which have remained solid in the face of a potential recession.
MM likes COL into weakness towards $17.00
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