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.
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.
