The Woolworths Group Ltd (ASX: WOW) share price has fallen 4.40% lower in 2020, but could it be back in the buy zone today?
Why the Woolworths share price could be a buy
The Aussie retailer's shares had a reasonably strong start to the year and hit a new 52-week high of $43.96 in late February. That was the peak for most ASX 200 shares before entering a bear market in February and March.
The Woolworths share price has since fallen 20.95% from that 52-week high to $34.75 per share at the time of writing. Given the S&P/ASX 200 Index (ASX: XJO) is down 18.87% in 2020, the retailer's shares are still outperforming the market.
While I think that Coles Group Ltd (ASX: COL) shares can outperform Woolworths in 2020, both retailers' shares could be back in the buy zone. Australia is starting to ease coronavirus restrictions, but I think the supermarkets will still see strong sales in 2020.
That's good news for shareholders and those looking for strong dividend shares this year. If sales remain steady in Woolworths' core business, that means the retailer may be able to maintain its 2.97% dividend yield.
What about the downsides?
While the Woolworths share price may be in the buy zone, it's not all sunshine and roses. There is still the ailing pubs business, Endeavour Group, that is under the retailer's ownership.
The hospitality sector has been smashed by recent government restrictions. These measures have forced many to temporarily shut their doors and lay off staff to stay afloat.
Woolworths had flagged a sale of the recently merged pubs business but COVID-19 has thrown those plans into doubt. While this may not materially impact earnings for Woolworths going forward, it could place a question mark over the Woolworths share price valuation.
Foolish takeaway
I think Woolworths will continue to be a strong defensive buy in 2020. With a 2.97% dividend yield and a solid technical environment, the Woolworths share price could be good value, although I still think Coles shares could be a better buy.
