Although they have started 2023 in a positive fashion, Wesfarmers Ltd (ASX: WES) shares are still down meaningfully over the last 12 months.
As you can see below, during this time, the conglomerate's shares have lost 17% of their value.
While this is disappointing, one leading broker believes that this share price weakness could have created a buying opportunity for investors.
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Big returns expected from Wesfarmers shares
According to a recent note out of Morgans, its analysts have the company's shares on their best ideas list with an add rating and $55.60 price target.
Based on where Wesfarmers shares are trading right now, this implies potential upside of over 17% for investors in 2023.
But it gets better! The broker is also expecting Wesfarmers to reward its shareholders with a $1.82 per share fully franked dividend this year.
This equates to a 3.85% dividend yield for investors, which stretches the total potential return to approximately 21%.
Why buy Wesfarmers?
The broker highlights that Wesfarmers is better positioned than most in the current economic environment due to its value offering. It points out that "Kmart is well-placed to benefit with the average price of an item at around $6-7."
Overall, Morgans believes that Wesfarmers shares are trading at an "attractive" level given the quality of its portfolio and strong balance sheet. It commented:
Trading on 22.5x FY23F PE and 3.8% yield, we continue to see WES's valuation as attractive for a high-quality business with a diversified group of retail and industrial brands, solid balance sheet and strong leadership team that will continue delivering long-term value for shareholders.
All in all, this could make Wesfarmers one to consider if you're looking for blue chip shares for your portfolio in 2023.
