Coles share price claims new 52-week high, could it still be a buy?

One broker believes the Coles share price could rise to $20.65.

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Key points

  • The Coles share price rose to a new 52-week high of $18.97 on Friday 
  • That's despite no news having been released by the supermarket operator since late April 
  • And it hasn't reached the ceiling yet, according to Morgans. The broker has slapped the stock with a $20.65 price target  

The Coles Group Ltd (ASX: COL) share price defied the broader market’s downturn on Friday to post a new 52-week high, and one broker thinks it could go even higher.

At its highest point today, the Coles share price was trading at $18.97, 1.87% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has been in the red all day. It’s currently down 0.75%.

So, what might be going on with the supermarket’s stock lately? Let’s take a look.

Coles share price inks new 52-week high

The Coles share price reached its highest point in more than a year on Friday despite the company’s silence.

In fact, the market hasn’t heard price-sensitive news from the supermarket since late April.

So, what might be driving it higher? Well, the Australian Bureau of Statistics found household spending increased in May despite the current inflationary environment earlier this week.

Speaking of, Coles has positive exposure to inflation, my Fool colleague James reported yesterday. On top of that, its sales have been growing and it holds a strong market position.

The supermarket can also pass on higher costs to consumers. In fact, it upped the price of Coles brand milk yesterday due to rising costs associated with sourcing, transporting, and packing the dairy product.

Morgans is one broker excited about the future of the Coles share price. It has reportedly slapped the stock with a $20.65 price target.

It also expects the supermarket giant to up its dividends to 61 cents in financial year 2022 and 64 cents in financial year 2023.

Motley Fool contributor Brooke Cooper 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 COLESGROUP DEF SET. 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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