Coles Group Ltd (ASX: COL) and Mineral Resources Ltd (ASX: MIN) shares are very different companies.
One is a supermarket giant, the other is a mining and mining services company.
But one thing they do share in common is a buy rating from the team at Bell Potter.
Let's see what the broker is saying about these two large cap ASX 200 shares.
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What is the broker saying about Coles shares?
Bell Potter notes that Coles released its quarterly update this week. And while its key supermarket business fell a touch short of the broker's expectations, it is growing quicker than the market. It said:
Revenue growth of +3.5% YOY to $9,507m, which is modestly below our $9,572m forecast and largely driven by price growth of +1.5% YOY in the quarter vs. our +2.0% forecast and ABS inflation of +3.3% YOY in the quarter. At a high-level COL has modestly outperformed ABS supermarkets growth in the quarter (at +3.2%).
Although the broker has trimmed its earnings estimates slightly, it remains positive. So much so, it has reaffirmed its buy rating on Coles shares with a slightly lowered price target of $20.50. This implies potential upside of 16.5% for investors from current levels.
Commenting on its recommendation, Bell Potter said:
Our Buy rating is unchanged. We see FY25e as a year of consolidation on a reported basis, however, we continue to see COL as providing an attractive earnings growth profile through to FY27e on an underlying basis driven by: (1) delivering $1Bn in cumulative savings by FY27e through Simplify & Save ($238m of which was delivered in FY24) (2) Sustained benefit of lower loss rates (+44bp margin tailwind YOY in 2H24); (3) Delivering targeted returns on a ~$1.45Bn capital investment program in ADC's and CFC's; and (4) Expansion of the store network at a pace consistent with population growth.
Mineral Resources
Another note reveals that the broker was relatively pleased with Mineral Resources' quarterly update, noting that "production in line with our estimates and guidance."
In response, the broker has retained its buy rating with a trimmed price target of $62.00. This suggests that upside of almost 60% is possible between now and this time next year.
Commenting on its buy recommendation, the broker said:
MIN continues to make good progress on its critical tasks of commissioning the Onslow Iron Project and deleveraging its balance sheet. We forecast that Onslow will become a foundational earnings driver for MIN from FY26. MIN still has numerous options to enhance its balance sheet, and we think more transactions are likely, going forward, eliminating market leverage concerns.
The Boards governance announcement (4 November) stands out as critical near-term catalyst for MIN. Looking forward 12-months, we think that process will be complete, MIN will continue to be a sector leader in agile operations and business development, and accordingly we maintain our buy recommendation.
