Is the Wesfarmers share price a buy or a sell in May?

Wesfarmers has had a rough trot in 2022 so far. But could it be May buy?

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Key points

  • It's not too often in history that Wesfarmers has been heavily sold off
  • Yet that's exactly what has happened in 2022 so far
  • So with Wesfarmers down so much in 2022, one broker reckons it's a buy right now

Before 2022, it would be a fair statement to say that investors in the Wesfarmers Ltd (ASX: WES) share price weren’t used to falling share prices. From 2018 until the back half of 2021, Wesfarmers shares went up in a fairly straight line, with the exception of the March 2020 COVID crash of course.

But 2022 has been telling a different tale. Wesfarmers has been one of the worst ASX 200 blue-chip share performers over the year to date. Since New Year’s Day, the Wesfarmers share price has fallen by a whopping 18.2%. Since the industrial and retail conglomerate hit its last all-time high of $67.20 in August last year, the company has now lost more than 25% of its value. Ouch.

But Wesfarmers is arguably one of the most diversified businesses on the ASX. It is certainly the most diversified company in the ASX 50. Its flagship Bunnings hardware business is almost universally praised as one of the top retail operations in the country.

But in addition to Bunnings, Wesfarmers also owns retailers OfficeWorks, Kmart, and Target. And that’s in addition to the plethora of other pies Wesfarmers has fingers in. These include mining, chemical manufacturing, and even a clothing line.

So now that Wesfarmers has given up such a significant chunk of its value in recent months, many investors might be wondering if this blue-chip share is a buy now that we are in May.

Is the Wesfarmers share price a May buy?

Well, one ASX broker who reckons Wesfarmers is a buy right now is Morgans. As my Fool colleague covered last month, Morgans currently has an “add” rating on Wesfarmers shares, together with a 12-month share price target of $58.50 a share. If that came to pass, it would result in a gain worth a tad over 19%. That’s not including dividend returns either.

The broker rates the company due to its strong balance sheet and its high quality portfolio, run by a “highly regarded management team”. Morgans even reckons Wesfarmers is in a good position to initiate future acquisitions. It is also pencilling in a big dividend increase in FY2023.

So no doubt that will come as music to Wesfarmers investors’ ears. But we’ll have to wait and see if Morgans’ predictions prove accurate.

At yesterday’s closing share price, Wesfarmers has a market capitalisation of $55.67 billion, with a dividend yield of 3.46%.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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