Why have ASX investors been buying Wesfarmers shares to hold?

Let's take a look.

| More on:
A businessman hugs his computer and smiles.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Wesfarmers share price has struggled over the last year, but its suffering doesn't appear to have stopped ASX investors from piling into the stock
  • Trading platform Selfwealth found 72% of users trading in the retail and industrials giant bought in during 2022
  • That was the equal highest buy trading percentage of all ASX shares swapping hands on the platform

The last 12 months have been rough on the Wesfarmers Ltd (ASX: WES) share price, but investors appear to be backing the stock for the future.

According to new data from trading platform Selfwealth, the stock boasted the highest 'buy trading' in 2022.

That means nearly three-quarters of people trading in Wesfarmers shares on the platform were buying into the embattled retail-focused giant.

The Wesfarmers share price is $47.40 right now. That's 16% lower than it was this time last year.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has dumped 3% over the last 12 months.

So, what might ASX investors have seen in Wesfarmers shares last year? Let's take a look.

Why did investors dive into Wesfarmers shares in 2022?

Wesfarmers shares certainly turned heads in 2022. But not only did the stock catch investors' attention, it seemingly held it.

72% of Selfwealth users trading in the stock last year were buying in.

That put it in equal first, boasting the highest buy trading percentage of all ASX shares on the platform alongside Adairs Ltd (ASX: ADH) and Xero Limited (ASX: XRO).

And there was plenty to like about the ASX 200 giant's stock.

Wesfarmers paid out $1.80 of dividends last year, leaving it with a 3.8% yield at the time of writing.

Investors may have also liked the company's headline retail brands, which include Bunnings, Kmart, and Officeworks.

Beyond such household names, though, the company also operates a number of industrial businesses and even a lithium resource.

Such a diverse fistful of operations has earned Wesfarmers shares the favour of Morgans. It's given the stock a place on its best ideas list, my Fool colleague James reports. The broker said:

[W]e continue to see [Wesfarmer'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.

Morgans has slapped the stock with a $55.60 price target – representing a potential 17% upside – and tips it to pay $1.82 of dividends this year.

Goldman Sachs, however, isn't nearly so hopeful. It's got a sell rating and a $40.60 price target on the ASX 200 share.

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 positions in and has recommended Adairs and Xero. The Motley Fool Australia has positions in and has recommended Adairs, Wesfarmers, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retail Shares

A man eases back onto his sofa, happy with the relaxed vibe from his furniture.
Retail Shares

Why I just sold half my shares in this ASX 300 stock even though I still love it!

I’m still a big fan of this business.

Read more »

Two fashionable asx investors dancing among confetti.
Retail Shares

2 'very high-quality' ASX retail shares with significant inside ownership

A fund manager has named two appealing stocks to own.

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Close-up Of Empty Shopping Cart Near Person's Hand Using Calculator Over White Desk
Retail Shares

Better buy: Coles or Woolworths stock?

Which stock should go in the shopping basket?

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
Retail Shares

Why did Super Retail shares drop after going ex-dividend?

This is the story behind the decline.

Read more »

Happy couple doing online shopping.
Opinions

Is it too late to buy after the Kogan share price rocketed 90% in a year?

Is this online retailer still an investment opportunity?

Read more »

Two people comparing and analysing material.
Retail Shares

Better buy in March 2024: Wesfarmers stock vs JB Hi-Fi stock

Which of these two retail heavyweights would be a better buy?

Read more »

A man eases back onto his sofa, happy with the relaxed vibe from his furniture.
Share Gainers

If you'd put $30,000 in this ASX retail stock 11 months ago, you'd have $116,000 now

When battered stocks make a comeback, it happens very quickly. Here's a prime example.

Read more »