How much could a $10,000 investment in Woolworths shares become in one year?

Let's see what analysts are predicting for the supermarket giant's shares.

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If you are lucky enough to have $10,000 burning a hole in your pocket, then it could be worth putting it to work in the share market.

But would Woolworths Group Ltd (ASX: WOW) shares be a good option for these funds? Let's see what an investment today could potentially turn into in one year.

Investing $10,000 into Woolworths shares

At present, the supermarket giant's shares are changing hands for $32.50.

This means that if you were to invest $10,000 (and a further $10), you would end up owning 308 Woolworths shares.

Let's now see what these shares could be worth this time next year.

According to a recent note out of Goldman Sachs, its analysts believe that now could be a great time to invest in the retailer.

In fact, your $10,000 investment could become worth significantly more if the broker is on the money with its recommendation.

It currently has a conviction buy rating and $39.40 price target on Woolies shares. If they were to rise to that level, those 308 units would have a market value of $12,135.20. That's over $2,000 more than your original investment.

But wait, there's more! Every six months, Woolworths shares a portion of its profits with shareholders in the form of dividends.

Goldman is expecting the company to pay fully franked dividends of $1.08 per share in FY 2024 and then $1.14 per share in FY 2025.

Let's assume that this means dividends of $1.11 per share over the next 12 months (the final dividend of FY 2024 and the interim dividend of FY 2025). This would mean dividend income of $341.88 from those 308 shares.

In total, this brings the total return on investment to approximately $2,650.

Why invest?

Goldman believes that Woolworths shares are being undervalued by the market. Particularly given its 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 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 its ability to 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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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