Will the Coles share price deliver for investors this Christmas?

The Coles Group Ltd (ASX: COL) share price had a relatively strong month in November.

During the period, the supermarket giant’s shares rose 3.8%.

While this was softer than the 6.1% gain recorded by the S&P/ASX 200 Index (ASX: XJO), it is worth noting that the materials sector played a key role in that gain.

When judged against the performance of the S&P/ASX 200 Cons Staples index, you’ll see that the Coles share price actually outperformed ever so slightly during the month.

Can the Coles share price keep rising in December?

While the Coles share price has started the new month in a subdued fashion, one leading broker believes it could be onwards and upwards from here.

According to a recent note out of Morgans, its analysts have put an add rating and $19.50 price target on the company’s shares.

So, with Coles’ shares currently fetching $16.90, this implies potential upside of 15.4% for investors over the next 12 months.

Why is Morgans bullish?

Morgans has been pleased with Coles’ performance in FY 2023, noting that its first quarter sales were ahead of expectations. It commented:

Coles Group’s 1Q23 sales trading update reflected the cycling of COVID lockdowns in the pcp with growth overall that was slightly above our expectations. LFL sales growth: Supermarkets +2.1% (vs MorgansF -1.2%); Liquor -4.1% (vs MorgansF -3.5%); and Express (c-store) +9.0% (vs MorgansF +8.5%).

It was also pleased to see that management said “sales, volumes and transactions strengthened through 1Q23 and has continued into 2Q23.”

Looking further ahead, the broker believes that Coles is well-placed to benefit from consumers looking for value options as the cost of living increases. It explained:

[W]e continue to see COL as offering good value with the company’s solid balance sheet and defensive characteristics putting it in a good position to navigate through a weaker economic environment. The unwinding of local shopping should also help further market share gains.

All in all, this could make the Coles share price one to watch carefully in December.