The Wesfarmers Ltd (ASX: WES) share price has had a mixed start to the year. While the Aussie conglomerate's shares are down 13% this year, that's still better than the 20.34% drop in the S&P/ASX 200 Index (ASX: XJO) in 2020.
So, is now a good time to invest $5,000 in Wesfarmers shares?
What's been moving the Wesfarmers share price this year
It's been a busy start to the year for the Aussie conglomerate. Wesfarmers has been front and centre in the government's plans to keep Aussies employed throughout the COVID-19 pandemic. Wesfarmers employs hundreds of thousands of Aussies and plays a big part in the Aussie economy.
In fact, Wesfarmers has business interests in the retail, chemicals, industrial and safety product sectors. The group isn't done yet after launching a takeover bid for rare earths mining company Lynas Corp (ASX: LYC) in August 2019.
Clearly, COVID-19 could have a big impact on Wesfarmers' earnings and share price. Further economic shutdowns and reduced trade is rarely good news for businesses. The group's retail brands could be hit hard with Wesfarmers flagging further Target store closures amid slumping sales.
However, it's not all doom and gloom for Wesfarmers. The Wesfarmers share price has outperformed the ASX 200 benchmark so far this year, despite falling lower. The group is also in a good position to weather COVID-19 with a strong balance sheet and clear strategy.
Wesfarmers recently sold its 5.2% stake in Coles Group Ltd (ASX: COL) for $1.1 billion. That's a handy boost in the current environment where "cash is king". I also suspect Wesfarmers is on the lookout for its next bargain buy right now.
The pandemic has hammered many ASX 200 shares, and you and I aren't the only ones hunting for cheap ASX shares. Wesfarmers shares could climb higher if it uses its dry powder and acquires another business or two.
Should you invest $5,000 today?
I've never been a huge fan of buying conglomerate shares. I like to do my own diversification in my portfolio rather than rely on CEOs to do it for me.
However, there's no doubt Wesfarmers shares could be a solid buy. The group's shares are yielding 4.20% right now and have a few different earnings streams to rely on while times are tough. If you're looking to invest $5,000 in ASX shares and have a diversified portfolio, Wesfarmers could provide some handy income today.
