Should I rush to buy this ASX 200 giant currently near its 52-week low?

A number of analysts think this stock is cheap at current levels.

| More on:
A woman with black afro hair and wearing a white t-shirt shrugs and purses her lips

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Endeavour Group Ltd (ASX: EDV) shares have underperformed the market over the last 12 months.

During this time, the ASX 200 drinks giant's shares have lost over 20% of their value. This leaves them trading within sight of their 52-week low.

While this is disappointing for shareholders, has it created a buying opportunity for others?

Is it time to buy this ASX 200 giant?

A number of brokers believe that the Dan Murphy's and BWS owner's shares could offer big returns over the next 12 months.

For example, Ord Minnett currently has an accumulate rating and $6.10 price target on its shares and UBS has a buy rating and $6.00 price target on them. This implies upside of 14% and 12%, respectively, for investors from current levels.

In addition, both brokers are forecasting 4%+ dividend yields in FY 2024 and FY 2025, boosting the total potential return further.

They are not alone with their buy ratings. The most bullish broker out there is Goldman Sachs, which has a buy rating and $6.20 price target on the ASX 200 giant.

This price target suggest that Endeavour's shares could rise almost 16% over the next 12 months. And like the other brokers, Goldman is expecting attractive dividend yields from its shares in the coming years.

Goldman expects fully franked dividends per share of 22 cents in FY 2024 and FY 2025, and then 24 cents in FY 2026. This will mean yields of 4.1% for the next two years and then 4.5% the year after.

All in all, if the broker is on the money with its recommendation, you could expect to receive a 20% return on your investment over the next 12 months.

To put that into context, this would turn a $20,000 investment into $24,000.

Why buy Endeavour shares?

A few weeks ago, Goldman explained why it thinks this ASX 200 giant is a buy. It named two key reasons underpinning its buy rating. The broker explained:

Our Buy thesis on the stock is based on the following key drivers: 1) Market share gain (already 40% market share) in defensive alcohol retail from consumer data and loyalty advantages; 2) Organic reopening beneficiary with its hotels/pubs business back to pre-COVID sales/property. We believe EDV is trading at a relatively attractive valuation, with potential downside from EGM tax changes already fully priced in. We are Buy rated on EDV.

Overall, this could make it a top option for investors looking for high-quality options for their portfolio.

Motley Fool contributor James Mickleboro has positions in Endeavour Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Stock market crash concept of young man screaming at laptop on the sofa.

Would I buy this ASX All Ords stock if it flies the nest for the UK?

No time to lounge around. Analysts reckon this Aussie company could voyage to the UK soon.

Read more »

A little girl holds broccoli over her eyes with a big happy smile.
Consumer Staples & Discretionary Shares

3 things about Woolworths stock every smart investor knows

Here’s what you need to know about this stock.

Read more »

Woman thinking in a supermarket.
Consumer Staples & Discretionary Shares

Are Woolworths shares a buy or a sell at under $33?

Should investors be 'buying the dip' with this one?

Read more »

Happy smiling young woman drinking red wine while standing among the grapevines in a vineyard.
Consumer Staples & Discretionary Shares

Treasury Wine share price climbs after China removes wine tariffs

Investors are saying cheers to the Chinese government on Tuesday.

Read more »

A couple of friends at a rooftop party enjoying some hot and tasty Domino's pizza
Dividend Investing

Own Domino's shares? Today is pay day!

Eligible Domino’s shareholders can expect some welcome passive income today.

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

a woman with lots of shopping bags looks upwards towards the sky as if she is pondering something.
Consumer Staples & Discretionary Shares

How a potential demerger could deliver a 10% upside for this ASX 200 stock

Investors might have even more reasons to love this ASX 200 stock if rumours are true.

Read more »