The Wesfarmers Ltd (ASX: WES) share price has fallen more than 7% over the past month. I think it’s a good time to invest in the ASX share.
Wesfarmers is the name behind some of Australia’s leading stores including Bunnings, Kmart, Target, Officeworks and Priceline.
Good time to consider Wesfarmers shares
Wesfarmers earns a lot of its profit from retail, which is currently going through a uncertain time considering all of the inflation and interest rate rises.
When times are tough for retailers and share prices are down because investors don’t know what happens next, that could be the right time to buy for the long-term. Be greedy when others are fearful, as the saying goes.
I believe that Bunnings and Kmart can continue to deliver good earnings compared to competitors because they are the largest and strongest in their respective areas, enabling them to get the best economic scale and provide customers with the best prices, which could mean a stronger market share.
Wesfarmers is also actively looking to expand in healthcare. It started by buying API, which is the parent company of Priceline and Clear Skincare Clinics. It’s also looking at other bolt-on acquisitions which could make sense including digital health and other clinic businesses.
The business has a compelling lithium project called Mt Holland which it’s working with a joint venture partner to make fully operational. Depending on what lithium prices do, it could be a major pillar of earnings in the future.
The Wesfarmers share price is now over 25% cheaper than the peak in 2021, so it looks a lot cheaper to me, particular with other parts of the business likely to start producing good profit in the next few years.
CMC estimates suggest the Wesfarmers share price is valued at 22 times the estimated earnings for FY24.
Final thoughts
It’s better value and the company has a good record of paying dividends to shareholders, I think it’s one of the types of businesses we can buy and own for the decades to come, though I wouldn’t expect it to shoot the lights out, particularly in the short-term.
