Why the Woolworths share price now offers a 'very rare opportunity'

Wilson Asset Management is bullish on the outlook for Woolworths shares.

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The Woolworths Group Ltd (ASX: WOW) share price slumped lower today.

At market close on Friday, shares finished trading at $31.08 apiece, down 1.36%.

For some context, the ASX 200 finished the week down 1.08%, pressured by fading hopes of interest rate cuts in 2024.

With today's fall factored in, Woolworth's stock is over 17% in 2024.

A large part of those losses were delivered on 21 February. That was when the company announced the shock departure of long-serving CEO Brad Banducci.

Woolies also reported on its half-year results that day, noting inflationary pressures were making customers more cautious.

And, of course, the Woolworths share price has been hit with some headwinds recently as policymakers debate the merits of legislatively increasing the competitive landscape among Australia's oligopolistic supermarket operators.

But much of this looks to be water under the bridge now.

Indeed, according to Wilson Asset Management investment analyst Hailey Kim, the Woolworths share price now looks to offer ASX 200 investors with "a very rare opportunity".

A couple in a supermarket laugh as they discuss which fruits and vegetables to buy

Image source: Getty Images

Why the Woolworths share price could be a bargain

Kim said she has a positive outlook for the ASX 200 supermarket stock despite the recent tough times.

She noted that Woolies is "the largest supermarket in Australia and they also are in department stores like Big W and also supermarkets in New Zealand as well".

As for the recent headwinds dragging on the Woolworths share price, Kim said:

They've been going through some tough times from regulatory environments to cost inflation and also some operational hiccups as well. But fundamentally within the underlying business is very solid.

Woolworths have invested in their tech and media capabilities well ahead of time, which we think will set them apart in the years to come.

Kim did caution that Wilson envisions some ongoing volatility over the next few months.

As for the latter part of 2024, she added:

When we think about the second half of this calendar year, we think the company will be able to demonstrate the fact that they've regained the sales momentum and also market share.

We have started to see consumers starting to cook and eat more at home, which is a lot more of a household budget friendly option as opposed to dining out. So that's also positive for the supermarket industry as well.

Kim said that given the recent Woolworths share price and price-to-earnings (P/E) ratio, the ASX 200 stock presents "a very rare opportunity where you can pick up a quality company at a deep discount".

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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