As things stand, Woolworths Group Ltd (ASX: WOW) shares are on course to record a solid gain in 2023.
Year to date, the retail giant's shares are up almost 9%.
In addition, Woolworths' shares have provided shareholders with a ~3% dividend yield, boosting the total return to approximately 12%.
But those returns are in the past. What about the next 12 months? Could the Woolworths share price beat the market again in 2024? Let's find out.
Can Woolworths shares beat the market in 2024?
The good news is that analysts at Goldman Sachs see scope for the company's shares to deliver even stronger returns in 2024.
According to a recent note, the broker has Woolworths on its coveted conviction list with a buy rating and a $42.40 price target. This implies a potential upside of 16% from current levels.
Goldman is also expecting an increase to the Woolworths dividend to $1.12 per share in FY 2024.
This represents a fully franked 3.1% dividend yield, which lifts the total potential return beyond 19%.
Why is the broker positive?
Goldman believes that Woolworths shares are good value based on its very positive outlook.
The latter is being underpinned by potential market share gains thanks to its omni-channel advantage and lucrative loyalty program. It explains:
WOW is the largest supermarket chain in Australia with an additional presence in NZ, as well as selling general merchandise retail via Big W. We are Buy rated (on Conviction List) on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as pass through any cost inflation to protect its margins, beyond market expectations.
The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock. Catalysts include 1H24 results with better-than-expected mix improvement to drive positive price and margins and a consistent demonstration of market share gains in FY24/25 that could lead to re-rating of the business vs COL/MTS.
