Coles Group Ltd (ASX: COL) shares were on form in 2024 and delivered the goods for investors.
Over the course of the 12 months, the supermarket giant outperformed the ASX 200 index by a decent margin.
Starting the year at $16.11, the Coles share price would finish it just a fraction away from a record high at $18.89.
This means that its shares recorded a gain of approximately 17.3% for the period before dividends.
Speaking of which, Coles paid out a fully franked 36 cents per share interim dividend in March and then a fully franked 32 cents per share final dividend in September.
This represents a 4.2% dividend yield based on its share price at the start of the year, which boosts the total 12-month return to 21.5%.
As a comparison, the ASX 200 index delivered a total return of 11.2%. This means that Coles shares almost doubled the market return in 2024.
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Why did Coles shares smash the market?
Investors were buying the company's shares last year after a strong underlying performance in FY 2024 offset any concerns over the ACCC taking it and Woolworths Group Ltd (ASX: WOW) to court over alleged misleading discount pricing claims on hundreds of common supermarket products.
In respect to its full year results, Coles reported a 5.7% increase in revenue to $43.6 billion and a 7.3% lift in underlying earnings before interest and tax (EBIT) to $2,175 million.
This growth was stronger than what Woolworths delivered for the year, which suggested that Coles was winning market share from its arch-rival.
The company then followed this up with a robust first quarter sales update in October which revealed a 2.9% increase in total sales. And with its sales growth continuing early in the second quarter, the market appears to believe that a solid first half result is coming in February.
What's next?
The team at Bell Potter is very positive on Coles and believes it could be a great pick for investors.
So much so, it has the company's shares on its Australian equities panel at present. These are its favoured Australian equities that it believes offer attractive risk-adjusted returns over the long term. The broker said:
Coles Group is a diversified company with operations in food, liquor, petrol retailing and financial services. Coles also retains a 50% ownership interest in Flybuys. Costs are expected to remain elevated but should moderate through FY24 and FY25 as general inflation tapers off.
In the medium term, 1) higher immigration should support grocery spending, and 2) Coles is entering a period of elevated capex intensity as it reinvests to modernise its supply chain and to catch up to competitors on online and digital offerings, which should help Coles maintain its market position.
