Another 52-week high: Are Wesfarmers shares stretched, or could they be a buy?

Is it too late to buy Wesfarmers shares today?

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Key points

  • Wesfarmers is one of the oldest blue-chip shares on the ASX
  • This morning, Wesfarmers hit a new 52-week high
  • So is it too late to buy?

The S&P/ASX 200 Index (ASX: XJO) has kicked off the trading week on a bit of a sour note so far this Monday. At the time of writing, the ASX 200 has clearly had a big weekend and gotten out of the wrong side of the bed this morning, with the index down by 0.14% at just over 7,320 points. But let's talk about Wesfarmers Ltd (ASX: WES) shares.

The ASX 200 may have started the week off on the wrong foot, but no one seems to have told Wesfarmers. Shares in this ASX 200 industrial and retail conglomerate are currently defying the market, gaining 0.63% today to $52.36 apiece.

A new 52-week high for this ASX 200 blue-chip share

Not only that, but this Monday has seen Wesfarmers shares hit a new 52-week high. This morning, the Wesfarmers share price climbed as high as $52.46. That's the company's new 52-week high watermark.

It's not too difficult to see why investors might be flocking to Wesfrmers shares today. The company announced some big news this morning, revealing that it has made an offer to acquire the skincare clinic operator Silk Laser Australia Ltd (ASX: SLA).

Wesfarmers has offered $3.15 a share for Silk Laser, which is a 30% premium to where this company closed last week. As we also covered this morning, this bid has seen the Silk Laser share price climb a whopping 25% following news of this bid.

So both Wesfarmers and Silk Laser investors clearly approve of this takeover offer.

But with Wesfarmers shares at a new 52-week high, this might cause some consternation. Wesfarmers is an ASX 200 share that has been on an absolute tear lately.

Not only are Wesfarmers shares up a hefty 15.3% year to date in 2023 so far, but the company is also now almost 30% higher than the 52-week low of $40.03 that we saw in the middle of last year:

So perhaps there might be some investors wondering if Wesfarmers shares are still worth buying today. One could argue that the company's shares are stretched after rocketing so much higher in 2023.

Are Wesfarmers shares still a buy at a new 52-week high?

Well, at least two ASX brokers have recently given the Wesfarmers share price a buy rating and share price targets well above today's new high.

As we covered earlier this month, ASX broker Morgans recently gave Wesfarmers shares an add rating, replete with a 12-month share price target of $55.6. That implies an upside of 6.2% from where the shares are right now.

Commenting on this recommendation, Morgans had this to say:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks.

The company is run by a highly regarded management team and the balance sheet is healthy. We believe WES's businesses, which have a strong focus on value, remain well-placed for growth despite softening macro-economic conditions.

So that's pretty optimistic from this ASX broker.

But it's not just Morgans that still likes the look of Wesfarmers right now. As we covered last week, fellow ASX broker UBS also rates Wesfarmers as a buy, with a share price target of $55.50.

We also recently looked at fund manager TMS Capital and its high-conviction view on Wesfarmers. TMS Capital reckons Wesfarmers' Mt Holland lithium project could end up being in the top tier of global lithium mines, helping the company to access another avenue of earnings in the future, potentially worth up to $1 billion annually.

So a bevvy of ASX experts still like what they see with Wesfarmers shares right now, despite this company's new 52-week high.

No doubt Wesfarmers shareholders will be comforted by these bullish views today.

At the current Wesfaremers share price, this ASX 200 blue chip share has a market capitalisation of just under $60 billion, with a dividend yield of 3.6%.

Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. 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. The Motley Fool Australia has recommended Silk Laser Australia. 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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