Woolworths Group Ltd (ASX: WOW) shares are normally a popular option for Aussie investors.
But that hasn't been the case over the past 12 months.
Due to a number of factors such as market share losses and regulatory action, the supermarket giant's shares have lost 14% of their value since this time last year.
While this is disappointing if you own its shares, it could be a buying opportunity if you don't.
That's the view of analysts at Goldman Sachs, which are bullish on the company and see major upside potential for investors.
Time to buy Woolworths shares
According to a recent note out of the investment bank, the broker has a buy rating and $36.10 price target on the company's shares.
Based on its current share price of $30.26, this implies potential upside of 19% for investors between now and this time next year.
In addition, Goldman is forecasting a fully franked 92 cents per share dividend in FY 2025 (growing to $1.10 per share in FY 2026), which would mean a 3% dividend yield for investors to look forward to.
Combined, the total potential return with Woolworths shares comes to 22% according to Goldman.
3 reasons to buy
The broker has named three reasons why it thinks investors should be snapping up the retail giant's shares.
The first is its expectation for robust supermarket sales growth in the near term. Goldman explains:
Our Buy thesis is based on 1) robust supermarkets growth of ~4% in FY23-26E driven by strong population growth and a rational, oligopoly environment.
Another key reason to buy Woolworths shares is its omni-channel advantage, which it believes will be very important with more and more sales heading online. It said:
2) omni-channel leader further extending share gains due to its early mover advantage in digitalization and omni-channel execution. By 2030E, we expect WOW to be the dominant leader in online with ~50% share in a space that is expected to go from 5% to 10% of the total grocery market.
Finally, the broker highlights Woolworths' leading loyalty program and attractive valuation. It concludes:
3) loyalty/retail media further margin opportunities: Woolworth's strong digital and omni-channel advantage is further reinforced through a virtuous cycle of loyalty and retail media (Cartology). WOW is also trading below fair value.
All in all, this could make Woolworths worth considering if you are looking for some blue chip additions to your investment portfolio this month.
