If you want to add some quality to your portfolio, then Coles Group Ltd (ASX: COL) shares could be a great option.
That's because Bell Potter believes that share price weakness on Thursday has given investors an opportunity to buy this blue chip at an attractive price.
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What is the broker saying?
Bell Potter was pleased with the company's performance during the first quarter of FY 2026.
It notes that supermarket sales came in a touch higher than it expected and largely in line with consensus estimates at $9,965 million. It said:
Revenue growth of +4.8% YOY to $9,965m, compared to our $9,925m forecast (and VA of $9,973m). Growth in the early part of 2Q26e has continued at rates comparable to 1Q26 and this compares to the +4.9% YOY growth recorded in the first eight weeks of the quarter. Outperformance relative to the sector seen in 4Q25-1Q26 looks to be continuing, though we are cognisant that COL benefited by ~$120m in late-2Q25 from WOW supply chain disruptions and this needs to be cycled in the coming period. E-commerce sales grew +27.9% YOY reaching 13.3% of sales, with growth within the recently commissioned CFC's outpacing this growth rate.
And while its liquor business continues to struggle in a challenging category, its sales were roughly as expected for the quarter. It adds:
Liquor revenue down -1.1% YOY at $842m (BPe $847m and VA $851m), with three net store closings in the period. E-commerce sales grew +7.6% YOY reaching 7.6% of sales. The category remains challenging.
Time to buy
According to the note, the broker has retained its buy rating and $24.30 price target on Coles shares.
Based on its current share price of $22.11, this implies potential upside of 10% for investors over the next 12 months.
In addition, Bell Potter is forecasting a fully franked dividend of 89.3 cents per share in FY 2026. This would mean a dividend yield of 4%, which stretches the total potential return to 14%.
Overall, the broker remains positive on Coles' outlook thanks to its cost savings, strengthening consumer backdrop, and investments in distribution centre automation. It said:
Our Buy rating is unchanged. Continued delivery against 'Simplify & Save' initiatives ($565m delivered to date vs. a target of $1Bn by FY27e), generating a return on ADC/CFC investments (~$1.45Bn investment and $103m of start-up costs in FY25) and a strengthening consumer backdrop are all reasons for our favourable view. While COL is trading at a premium to historical average (~8.6x FWD EBITDA) and a premium to WOW, COL has continued to outperform WOW at the top line over 4Q25- 1Q26 and into the early stages of 2Q26e.
