The Woolworths Group Ltd (ASX: WOW) share price has started the week on a positive note on Tuesday.
In afternoon trade the conglomerate's shares climbed 1.5% to hit a 52-week high of $31.72. This stretched its 12 month return to a sizeable 18.5% excluding dividends.
Why is the Woolworths share price at a 52-week high?
Woolworths' shares have been on a solid run over the last 12 months thanks largely to improving trading conditions and the return of rational competition in the supermarket industry.
This led to the company's key Australian Food segment growing sales by 2.3% and earnings before interest and tax by 4% during the first half of FY 2019.
Woolworths also saw a big improvement in the performance of its BIG W business. It grew sales by 2.7% to $2,091 million during the half thanks to a positive second quarter driven by strong Toys and Leisure sales. And while the business is still making a loss, this loss has narrowed considerably.
Should you invest?
Whilst I think that Woolworths is a quality company, at 24x trailing earnings I feel its shares are a touch expensive at present based on its current growth profile and would suggest investors hold off an investment until they provide a more compelling risk/reward.
In the meantime, I think both Coles Group Ltd (ASX: COL) and Wesfarmers Ltd (ASX: WES) shares could be great alternatives for investors.
At present the Coles share price is changing hands at approximately 19x estimated full year earnings and Wesfarmers shares are trading at 20x estimated full year earnings.
Incidentally, earlier this month analysts at Macquarie put an outperform rating and $37.13 price target on Wesfarmers' shares and an underperform rating and $26.84 price target on Woolworths' shares. The leading broker remains neutral on Coles with a price target of $12.19.
