The Coles Group Ltd (ASX: COL) share price has been on a positive run in recent weeks.
Since this time in September, the supermarket giant's shares have climbed over 6%.
This compares favourably to a broadly flat S&P/ASX 200 Index (ASX: XJO) over the same period.
Can the Coles share price keep rising?
The good news is that a number of brokers believe the Coles share price can still climb higher from here.
One of those is Morgans. According to a recent note, the broker has put an add rating and $19.90 price target on the company's shares.
Based on the current Coles share price of $18.07, this implies potential upside of 10% for investors over the next 12 months.
In addition, the broker has pencilled in a fully franked dividend of 61 cents per share in FY 2022. This brings the total potential return to approximately 13.5%.
What did the broker say?
Morgans was pleased with Coles' performance in the first quarter. Both its Supermarkets and Liquor businesses delivered like for like (LFL) sales results ahead of the broker's expectations.
The broker commented: "Supermarkets LFL sales increased 1.4% (vs MorgansF +0.1%) driven by ongoing at-home consumption with NSW, ACT and VIC in lockdown during the quarter and strong online growth, while the picnicware campaigns resonated with customers. […] Liquor LFL sales increased 1.4% (vs MorgansF -1.6%) despite cycling elevated COVID-driven growth of 17.8% in the pcp."
This ultimately led to the broker upgrading its earnings forecasts, which it feels has left the Coles share price trading at an attractive level.
Morgans concluded: "COL is a defensive business with strong market positions and a healthy balance sheet. While Supermarkets and Liquor sales growth is likely to moderate as economies reopen and the risk of lockdowns decrease due to higher vaccination rates, trading on 23x FY22F PE and 3.5% yield we continue to see the stock as offering good value."
