Is Coronavirus Behind Wesfarmers’ Share Price Rise? (ASX:WES)

A resurgence in coronavirus case in Victoria could be behind the latest rise in the Wesfarmers Ltd [ASX:WES] share price.

As Victorians are placed under strict lockdowns for a second time, investors are again forced to consider the economic impacts of the virus.

The takeaway?

It pays to own necessities.

Shares in WES are up 0.51% or 23 cents at the time of writing to trade at $45.71.

WES stocks are almost back to their pre-coronavirus prices.

The conglomerate has pushed firmly out of its March low to nearly recover all losses in just a few months.

ASX WES Share Price - Wesfarmers ASX

Source: Tradingview

A fragile peace

The shock reintroduction of strict lockdowns across Victoria might serve as a reminder that Australia is not yet in the clear.

It might also have investors once again seeking out dependable blue chip stocks that have already weathered one coronavirus storm.

WES owns big brand names like Officeworks, Bunning, Target and Kmart.

It also owns online giant Catch and retains a 4.9% holding in Coles Group Ltd [ASX:COL].

What all these brands have in common is they provide necessities.

And the necessities are that business is booming.

Discover five ASX-listed firms that have been beaten down during the crisis…with the potential to rally strongly as the market recovers. Click here to learn more.

Stockpiling groceries pushed COL sales up 12.9% in Q3 of FY202 producing a total revenue of $9.2 billion.

Supermarket sales alone increased by 13.1%, spurred on by the groceries rush.

Another bump in sales could be on the cards with Victorians again in lockdown.

Both Bunnings and Officeworks recorded significant sales growth too.

With many Australians being forced to spend greater time at home, spending on home improvement and home office gear consequently increased.

Bunnings sales were up 19.2% and Officeworks sales were up 27.8% in H2 of FY2020.

However, Kmart and Target both suffered from COVID-19 restrictions.

Target sales growth declined by 1.8% in H2.

While Kmart sales growth was modest at 4.1%, marking a decrease of 3.5% from H1.

Has WES lucked into the perfect retail market?

With lockdown restrictions now easing country wide (expect for Victorians) foot traffic returning to shopping centres could result in seeing an uptick in sales in the next round of results.

However, our lives may be forever changed by the pandemic.

As working from home becomes a permanent fixture for some, retailers like Officeworks could notice a more prolonged boost to sales.

Regardless of the global pandemic, WES seems to have compiled a solid group of brands.

Even without a pandemic to spur on sales, WES shares made a 12-month return of ~30% in 2019.

With a current year-to-day return of nearly 10.5%, the resilience of WES is admirable.

But WES is just one of a handful of dividend stocks doing well post market crash. Be sure to check out our top five ASX-listed dividend stocks with a great chance of maintaining big payouts during and after the crash.  Click here to download your free report.

Kind regards,

Lachlann Tierney
The Rum Rebellion

 


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


Leave a Reply

Your email address will not be published. Required fields are marked *

The Rum Rebellion