Wesfarmers Limited [ASX:WES] is a diversified conglomerate. The company operate chain supermarkets, liquor shops, home improvement stores such as Bunnings and Officeworks, as well as mid-market department chain Target and the discount retailer Kmart.
Also under their umbrella are insurance and financial services, two coalmines, and chemical and fertiliser division. They even have interests in industrial and safety products and services to the mining industry.
The share price closed 2.28% lower on Thursday.
Full year 2014 financial results hit the market yesterday. Net profit was up 19.2% for the year to a massive $2.69 billion. Growth in Coles supermarkets was up 9.1% for the year. And sales growth in Bunnings was 11.7% higher.
Boosting the bottom line was the sale of their 40% interest in the Air Liquide business in Western Australia for $1.03 billion.
Net profit was up 19% to $2.69 billion for the financial year. The final dividend was $1.05, bringing this year’s dividend to $2.00 per share, up twenty cents from 2013 dividend.
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Yesterday the stock was up 3.80% on the profit news. Today the good news didn’t last as some investors took some profits.
However, the stock downgrades from Macquarie and Credit Suisse may have weighed on the market. Both companies rerated the stock from neutral to underperform.
Wesfarmers is one of those stocks that investors buy and place in their portfolio without much thought. However, buying into the stock at this it current price of $44.62 could see investors overpaying for the company.
Wesfarmers diversified interests make it a solid defensive stock. And with Air Liquide they have proven their ability to buy a struggling business, improve it and sell for a profit.
If you are looking to buy Wesfarmers, it will pay to time your entry into this stock when the market drives it down.
Shae Smith+
Editor, Money Weekend
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