When a quality ASX 200 stock gets an almighty beatdown on the markets, it's enough for me to pay close attention. After all, Warren Buffett's famous maxim of 'be greedy when others are fearful' is a tried and true method of buying market-beating ASX investments.
That's exactly what has happened to the Coles Group Ltd (ASX: COL) share price over the past month or two. Back in late June, Coles shares weren't too far away from their current 52-week high of $18.85 a share. But today, this ASX 200 consumer staples giant is languishing at under $16 a share. Coles is currently trading for $15.94 at the time of writing.
That share price puts Coles down more than 14% from its June highs, as well as down 3.16% for 2023 to date. Coles is also nursing a loss of 7.8% over the past 12 months, as you can see below:
Image source: Getty Images
Earnings dent this ASX 200 stock's share price
The primary catalyst behind the recent weakness we have seen in this ASX 200 stock was the earnings report Coles delivered last week. As we covered at the time, this saw Coles report operational revenue growth of 5.9% to $40.5 billion. As well as a 4.8% increase in net profits after tax (NPAT) to $1.1 billion. Coles' full-year dividends were also bumped up by 4.8% to a fully franked 66 cents per share.
However, rising costs related to inflation and Coles' distribution and fulfilment centres proved a major drag on investor sentiment. On the day these results were released, Coles shares took a nasty 7.08% hit and fell under $16 each. That's the levels we still see the shares languishing at today.
While higher costs are never what investors like to see, I think the rather sizeable share price pullback we are witnessing right now is a compelling buying opportunity for this ASX 200 stock.
Why I'd like to buy Coles shares this September
Sure, Coles is facing some inflationary pressures. But most ASX 200 stocks are having to deal with this at the present time. Inflation in the economy doesn't discriminate. But due to Coles' consumer staples nature and the nature of the products it sells, I think Coles is better suited than most to eventually pass on these costs to consumers.
Further, it was disappointing to see costs ramp up across Coles' distribution and fulfilment centres. However, these investments are vital for the future profitability of Coles and should result in supply chain efficiencies and other benefits once they are fully operational.
So I thought that the market's reaction to these latest earnings was a bit extreme, and have made this ASX 200 stock a compelling buy for September 2023.
The big fall in the Coles share price we have recently seen has also pushed up Coles' trailing dividend yield to an attractive 4.14%. That's far more appealing than Coles' arch-rival Woolworths Group Ltd (ASX: WOW)'s dividend yield of 2.75% today.
As such, I'll be eyeing off Coles shares for a buy this September. Especially if this ASX 200 stock stays under $16 a share.
