Although the Wesfarmers Ltd (ASX: WES) share price has dropped lower today, it has still been a market beater in 2019.
Since the start of the year the conglomerate's shares have provided a return of 26% excluding dividends.
Why is the Wesfarmers share price on fire this year?
Investors have been buying the company's shares this year thanks to its strong performance in FY 2019 and a couple of big acquisitions.
In respect to its results, in FY 2019 Wesfarmers reported a 4.3% increase in revenue from continuing operations to $27,920 million and a 13.5% lift in profit after tax excluding significant items to $1,940 million.
A key driver of this strong result was its all-important Bunnings business. It is now the biggest contributor to earnings following the Coles Group Ltd (ASX: COL) demerger, so its strong profit growth went down especially well with the market.
And in regard to acquisitions, Wesfarmers may have pulled out of a deal for Lynas Corporation Ltd (ASX: LYC), but it completed acquisitions of lithium producer Kidman Resources and online retailer Catch Group.
Whilst there are still question marks over the Kidman Resources purchase, investors appear to be in complete agreeance that the acquisition of Catch Group for $230 million has been a good addition.
Catch Group is an established, profitable and cash-generative business that operates an online business model offering branded products on a first-party basis and a third-party online marketplace. It is expected to support the development of Kmart and Target's omni-channel and fulfilment capabilities.
Should you invest?
I think that Wesfarmers is one of the better blue chips on the local share market and believe it would be a decent addition even after its strong gain this year.
Especially given the improving housing market and the low interest rate environment we are living in. I estimate that its shares currently provide a fully franked forward 3.7% dividend yield.
