The S&P/ASX 200 Index (ASX: XJO) share Coles Group Ltd (ASX: COL) is well-liked by a number of experts thanks to the high level of execution that the supermarket business is delivering.
There has been a long-running rivalry between Coles and Woolworths Group Ltd (ASX: WOW) to gain market share. Aldi is the other main player in Australia's supermarket sector, with the German player focused on offering households the best value, rather than the biggest range or the most convenience that Australia's biggest supermarkets are providing.
In the battle between Coles and Woolworths, experts are seeing Coles as the winner. Some of the experts who really like Coles shares are the fund managers of WAM Leaders Ltd (ASX: WLE), a listed investment company (LIC) that focuses on the highest-quality ASX shares.
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Why the ASX 200 share is a buy
The scale of Coles Group is impressive, it has more than 1,800 supermarkets and liquor stores across Australia.
WAM noted that the August reporting season revealed a strong result for Coles, underpinned by profit margin expansion and "robust sales momentum", with July and August sales growth beating market expectations.
The supermarket business reported that in the first eight weeks of FY26, supermarket sales revenue increased by 4.9% (or 7% excluding tobacco). Coles said this sales growth was supported by continued strength in volumes as it invested in customer value and experience.
The fund manager pointed out that the ASX 200 share highlighted early signs of an improving consumer backdrop, combined with the disciplined execution of its strategy.
WAM said earnings growth in FY26 and beyond is expected to be supported by improving returns on supply chain investments and sustained cost efficiencies.
The investment team also see its "enhanced capability in online operations and retail media as key drivers of long-term value, supporting a premium to historical valuations."
Coles share price valuation
In WAM's concluding thoughts on the ASX 200 share, the fund manager said:
Given Coles Group's superior execution, the company is well positioned to command a valuation premium relative to Woolworths…reinforcing its role as a core portfolio holding.
According to the forecasts on Commsec, the Coles share price is valued at 26x FY26's estimated earnings, while the Woolworths share price is valued at 21x FY26's estimated earnings.
