MENU

Wesfarmers Ltd (ASX:WES) share price plummets 30% as spinoff Coles hits the ASX boards

The Coles Group Limited (ASX: COL) share price has hit the ASX boards this morning and is currently priced at $12.58

Analysts had been tipping a price of $13.00 to $14.00 for the supermarket giant’s shares, so investors will be reasonably pleased with this outcome given the market selloff today.

Going the other way this morning is of course the Wesfarmers Ltd (ASX: WES) share price. It is down a massive 30% in early trade after investors revalued its shares to reflect the absence of the Coles business.

Once again, I think this is a decent outcome for shareholders. I estimate that this has wiped almost $15 billion off the Wesfarmers market capitalisation today, whereas the Coles market capitalisation currently stands at ~$16.8 billion.

Should you invest in either business?

Wesfarmers’ performance will now be largely reliant on the success of its Bunnings business. While I’ve been pleased with what I’ve seen from Bunnings and think it is one of the highest quality retailers in Australia, it will be interesting to see how it fares during the housing market slowdown.

Some believe it will be negatively impacted by the housing market weakness, whereas others have predicted that it will benefit as consumers focus less on buying and selling houses and more on renovating them.

In addition to this, all eyes are on what Wesfarmers does next. The company has money to spend and this could have a major impact on investor sentiment.

Fletcher Building Limited (ASX: FBU) has been tipped as a potential target in the past. So, with its shares crashing to a 52-week low today, perhaps it will be on the company’s radar again.

What about Coles?

I like Coles and believe it could be a good option for investors looking at low risk and stable options. However, it might be worth waiting to see how the supermarket performs over the all-important Christmas period before considering an investment.

In the meantime, here is a top dividend share that is tipped to grow strongly over the coming years.

OUR #1 dividend pick to grow your wealth now is revealed for FREE here!

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!