The Wesfarmers Ltd (ASX: WES) share price has recovered strongly since the early phase of the coronavirus pandemic. The company's share price has risen by 44% from its low of $31.02 on 23 March to close yesterday at $44.83.
Wesfarmers has operations spanning a broad spectrum of the Australian economy. This provides it with a buffer to any industry-specific challenges that may come its way. In particular, Wesfarmers' online offerings have seen increased demand during the coronavirus crisis.
So, is the Wesfarmers share price in the buy zone right now?
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Online sales continue to grow strongly
Wesfarmers provides online retail offerings via its Target and Kmart offerings, as well as its pure online offering, Catch.
Online demand been particularly strong in recent months, as consumers have stayed away from brick-and-mortar stores. Online sales for Catch have risen by a whopping 69% in the half-year to date up to early June. In comparison, Catch's online sales only rose by 21% in the 6 months ending December last year.
Although online sales growth for Wesfarmers is likely to be more subdued as the coronavirus pandemic eases further, consumer habits may to some degree have changed permanently. Many Australians are finding that the online channel is very attractive due to its convenience and price competitiveness over physical stores.
Bunnings and Officeworks continue to be star performers
Wesfarmers' Bunnings and Officeworks stores have continued to perform strongly in recent months. For the half year to date until early June, Bunnings' sales rose by 19.2%, compared to growth of just 5.8% during 1H20. Officeworks also has seen strong recent growth due to more Australians purchasing goods to help them work and learn in a home environment during the pandemic.
Target, however, continues to be a problem for Wesfarmers. In late, May Wesfarmers announced it will implement a strategy to downsize its underperforming Target store network.
So, does the Wesfarmers share price offer good value to investors right now?
The Wesfarmers share price has rallied strongly in recent months, regaining nearly all of its share price losses incurred during the initial period of the coronavirus pandemic. Wesfarmers shares also rose strongly in the 12 months prior to the pandemic, so are no longer looking cheap.
Despite this, I still believe the Wesfarmers share price is in the buy zone. The long-term growth potential of Wesfarmers remains strong driven by a diversified portfolio of quality assets. In particular, I feel that its Bunnings chain has the potential to grow further over the next decade.
