Searching for a winning S&P/ASX 200 Index (ASX: XJO) investment? Wesfarmers Ltd (ASX: WES) shares could be worth looking at, according to one broker.
Morgans tips the stock to surge 8% to trade at $55.50 in the future, slapping it with an add rating, as my Fool colleague James reports.
Right now, stock in the ASX 200 retail-focused conglomerate is trading for $51.28.
So, what makes Wesfarmers shares a buy? Here's what Morgans thinks.
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3 reasons to buy Wesfarmers shares: broker
High-quality retail businesses
One of the major draw cards for Wesfarmers shares cited by the broker is its retail brands, said to be one of Australia's "highest quality" business portfolios.
The ASX 200 favourite is behind Aussie icon and sausage sizzle host Bunnings, discount retail goliath Kmart, and Officeworks, to name a few.
It also recently snapped up the Priceline brand through its acquisition of formerly-listed company Australian Pharmaceutical Industries and includes Catch.com.au in its portfolio.
Winning management team
Morgans also likes the company for its "highly regarded management team".
The company is headed by CEO Rob Scott, who has been in the role since 2017 and was previously the managing director of Wesfarmers' industrials division.
Defensive qualities
Finally, the broker said the company's businesses "remain well-placed for growth despite softening macro-economic conditions". It also noted it likes the look of Wesfarmers' balance sheet.
That implies Wesfarmers is defensive in nature. A defensive stock is one that's generally less impacted by economic ebbs and flows than the broader cohort.
Thus, they can generally continue growing despite economic impacts such as high inflation or rising interest rates.
Wesfarmers is arguably defensive largely due to its pricing power. Many of its offerings will attract consumer spending no matter the environment.
Customers will probably still file into Bunnings and Kmart to buy household necessities during hard times even if prices were to increase here and there.
