The Coles Group Ltd (ASX: COL) share price has had a bit of a rally in recent weeks. It was only this time last month that the supermarket giant was asking well under $16 a share, $15.74 to be exact. But fast forward to the present, and Coles shares are well over $16.
In fact, the ASX 200 consumer staples stalwart is trading for $16.16 a share at the time of writing, having lost 0.55% today, but still up 2.7% over the past month.
I've long eyed off Coles shares as a potential dividend investment. After all, this company has shown a remarkable ability to fund clockwork-like annual dividend pay rises to its shareholders over the past four years. That's not something that Coles' arch-rival Woolworths Group Ltd (ASX: WOW) can claim.
So now that Coles is over $16, will I be buying some shares?
Am I buying the Coles share price at $16?
Well, let's get this out of the way. The fact that Coles shares are rising in value makes the company less attractive to me as an investment, not more. I like buying shares at a discount to their true value.
And regardless of what the 'true value' of Coles shares is, a 3% rally over a month means that Coles is now 3% more expensive than it was in early December.
So I'm less inclined to buy the company today than last month.
Back in October, Coles shares actually fell below $15 each, as you can see below:
That would be closer to the levels I would consider to be a compelling investment.
Don't get me wrong, I think Coles shares remain attractive today, especially for income-focused investors. The company continues to grow at a healthy rate, with revenue up 5.9% over FY2023 to $40.5 billion.
Yet Coles shares are still trading on a relatively cheap price-to-earnings (P/E) ratio of 20.4. And you could certainly do a lot worse than its 4.08% fully-franked dividend yield that the company closed at yesterday.
But I'll be waiting until Coles is at least back under $15 a share to buy, not over $16 as it is today.