Coles Group Ltd (ASX: COL) shares have enjoyed an exceptionally strong run over the past year, despite taking a tumble today.
In late afternoon trade on Thursday, shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant are down 1.5%, changing hands for $22.11 apiece.
Still, that leaves Coles stock up 25.3% over 12 months, racing ahead of the 6.3% one-year gains delivered by the ASX 200.
And let's not forget the two fully franked dividends, totalling 69 cents a share, that Coles paid to eligible stockholders over the year. At the current price, that sees Coles shares trading on a fully franked trailing dividend yield of 3.1%.
Clearly then, you're unlikely to hear any longer-term shareholders complaining about the past year's returns.
But if we zoom in to the past two months, we'll see that Coles stock closed at an all-time high on 4 September at $24.09 per share. Which means shares are now down around 8% from that record closing high.
For comparison, the ASX 200 has slipped 1.3% over this same period.
And according to Fairmont Equities' Michael Gable, resilient inflation in Australia could pose further headwinds for the ASX 200 stock (courtesy of The Bull).
Image source: Getty Images
Is the bull run over for Coles shares?
"The supermarket giant recently announced a sales update for the first quarter of fiscal year 2026, which was generally in line with what analysts expected," said Gable, who has a sell recommendation on the stock.
Gable noted:
Supermarket revenue rose, but liquor revenue fell. Total group sales revenue of $10.963 billion was up 3.9% on the prior corresponding period. The shares have risen from $18.47 on March 19 to trade at $22.13 on November 6.
And Gable believes that a 19.8% gain in Coles shares is difficult to warrant.
"We can't identify sufficient catalysts to justify the share price," he said.
As for the spectre of persistent inflation and elevated interest rates, Gable concluded, "We believe the recent uptrend is at risk of reversing, partially driven by persistent high cost of living conditions in a subdued economy. We would be inclined to cash in some gains."
Indeed, trimmed mean inflation in the September quarter was up 3% over the year, rising from a 2.7% annual increase in the June quarter. And it was worse news for headline inflation, which leapt 3.2% over the year in the September quarter.
With inflation on the rise, the RBA left interest rates on hold at 3.60% at its last meeting, with expectations that the central bank will hold rates steady again in December.
And if Gable is right, that kind of ongoing cost of living pressure could see the past year's uptrend in Coles shares reversing.
