Is the weakness in the Coles (ASX:COL) share price a buying opportunity?

The Coles Group Ltd (ASX: COL) share price has been among the worst performers on the S&P/ASX 200 Index (ASX: XJO) on …

| More on:
questioning whether asx share price is a buy represented by man in red shirt scratching his head

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Coles Group Ltd (ASX: COL) share price has been among the worst performers on the S&P/ASX 200 Index (ASX: XJO) on Thursday.

The supermarket operator's shares were down as much as 5% to $16.14 at one stage today.

The Coles share price has recovered slightly since then but remains down 4% to $16.38 at the time of writing.

Why is the Coles share price sinking today?

The Coles share price has come under pressure on Thursday following the release of its strategy day update this morning.

While there were a number of positives in the update, such as its progress with cost cutting and sales density, investors appear to have reacted negatively to comments relating to its capital expenditure and depreciation.

Coles revealed that it is expecting its capital expenditure to increase to $1.4 billion in FY 2021, whereas its depreciation is forecast to rise to ~$1.7 billion.

What was the reaction?

A note out of Goldman Sachs reveals that its analysts have been running the ruler over today's update.

The broker commented: "Supply chain and online upgrades have the potential to materially impact long term profitability for COL and materially change the competitive landscape. However, the medium-term costs from a capex, overlapping costs and D&A perspective are higher than previously expected, potentially taking some of the shine off the significant structural progress being made by COL."

Is this a buying opportunity?

While Goldman Sachs may yet make revisions to its recommendation, for now the broker rates the Coles share price as a buy.

It has a buy rating and $20.50 price target on the company's shares. This implies potential upside of 25% over the next 12 months excluding dividends. And if you include dividends, this potential return stretches to a sizeable 29% over the same period.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

James Mickleboro does not own any shares mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Retail Shares

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

a thoughtful shopper with shopping bags wearing sparkly gold dress and matching shoes reclines on a chair with hand to chin in thought.
Retail Shares

Can Lovisa's new high profile CEO take Lovisa shares to new heights?

Is Lovisa about to embark on a new era of growth?

Read more »

A woman sits on sofa pondering a question.
Retail Shares

After soaring 244% in 5 years, how much further upside does Macquarie tip for Nick Scali shares?

The broker's expectations remain steady.

Read more »

Girl with make up and jewellery posing.
Retail Shares

Buying the dip: $5,000 invested in Lovisa shares a month ago is now worth…

It's been an outstanding first month for new Lovisa shareholders.

Read more »

Woman checking out new iPads.
Retail Shares

JB Hi-Fi share price sinks on sales growth figures

JB Hi-Fi shares are under pressure on Wednesday. But why?

Read more »

a close up of a motorcycle's front wheel and body on the open road with another motorcycle rider in the background cruising behind the leading driver.
Retail Shares

Up 100% in 11 months, can this small-cap ASX stock keep flying higher?

This business has delivered huge returns. Is it still a buy?

Read more »

A happy woman peaks out from under her bed sheets
Retail Shares

Interest rate cut beneficiaries: Should I buy Adairs or Temple & Webster shares?

These two ASX stocks should benefit from rate cuts.

Read more »

A warehouse worker is standing next to a shelf and using a digital tablet.
Retail Shares

3 reasons why the Wesfarmers share price could still be a buy

Wesfarmers is a wonderful business for a few reasons.

Read more »