Is it time to buy Coles (COL)?
Hi team, Wondering if you think Coles is finally a buy? Regards P & B Hopley.
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Answer
Hi Guys,
The supermarkets space is actually a fascinating one at the moment, and we don’t often say that, however COVID, like many things has accelerated the move towards online where scale is incredibly important. In 2019 $5.5bn worth of groceries were sold online, that number jumped to $8.7bn in 2020, and we think much of that transition is now ‘sticky’.
COL continues to bounce around between $15.50 and $16 following the sharp drop in February after delivering a disappointing half year result which showed a drop off in market share combined with a tough near term outlook, hence their reintroduction of the red finger campaign.
MM is not considering COL just yet, but weakness below $15 would return value to the stock, especially from a yield perspective. We prefer Metcash (MTS) overall which we hold in the Income Portfolio.
