Coles Group Ltd (ASX: COL) shares have enjoyed a strong run in 2024. They are up 18.7% this year to date and finished trading on Tuesday at $19.12 apiece.
With the S&P/ASX 200 Index (ASX: XJO) 7.2% higher in the same period, Coles shares have outperformed the broader market.
Not to mention the 64 cents per share in dividends the company has paid over the last 12 months.
But after this outperformance, is it time to buy, sell, or hold this ASX supermarket giant? Let's see what the experts think.
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Coles shares: What's the verdict?
According to CommSec, the consensus rates Coles shares as a hold, with five buys, nine holds, and two sells. So, while some brokers remain bullish, others are erring on the side of caution.
But in terms of the rigid 'buy or sell' scenario in question here, the weight is biased toward brokers rating the stock as a buy. Although we can't ignore those bearish on the stock either.
First, let's look at the buys.
Citi is one bullish broker. It recently reiterated its buy rating on Coles shares, setting a price target of $21.
The broker forecasts fully franked dividends of 73 cents per share in FY25 and 85.5 cents in FY26.
Macquarie also remains bullish on Coles, retaining its buy rating with a price target of $20.20 in a recent note.
It liked Coles' FY24 performance, especially its margins. Macquarie believes Coles' cost-saving initiatives set the company up for continued growth in FY25.
Meanwhile, UBS has a buy rating on the supermarket giant with a price target of $19.50, citing steady dividend growth and strong fundamentals as key reasons to back the stock.
What about the other side of the coin?
Coles has long been seen as a defensive stock, benefiting from its stable, recession-proof earnings. But despite its solid performance this year, not all analysts are convinced.
Goldman Sachs, for instance, holds a neutral rating on Coles shares with an $18 price target. If correct, this implies a small amount of downside from current levels.
The risk is those such as Goldman are correct, in that the market has got ahead of the stock and that Coles shares could be overvalued.
They currently trade on a price-to-earnings ratio (P/E) of 22 times, slightly ahead of the broad market's valuation of 20 times earnings.
In that regard, investorbuying Coles shares might expect it to outperform the market – but they are paying a premium for this return. Food for thought.
Foolish takeaway
Coles shares have been a standout performer in 2024, and some brokers remain optimistic about their future prospects. Others, however, are on the fence.
The Coles share price is up 21.4% in the past year.
