Fast-running Wesfarmers shares hit record high as investors jump aboard Kmart, Bunnings surprise

Wesfarmers shares have hit their highest mark since the one-time farmers co-operative embarked on a new life on the stock exchange nearly 40 years ago. WA’s biggest listed wealth creator after Fortescue Metals followed Monday’s record closing high by hitting a new peak of $67.39 in early trading on Tuesday, bettering the $67.20 it achieved during the bumper sales of COVID-19 in August 2021 and revaluing the group at nearly $76 billion. As at at 10.40am, it was 55¢ higher at $66.70. Wesfarmers is on a tear, up 33 per cent since October, eclipsing the 13 per cent rise in the S&P-ASX200 over the same period and delighting its legion of mum and dad shareholders. The stock has gained 14 per cent since its interim results on February 15 came in better than expected, with the strength of Kmart, in particular, catching analysts by surprise. “There looks to have been a step change in Kmart’s performance,” Bank of America’s long-time Wesfarmers watcher David Errington told investors after the results. “Bunnings also looks to be a better business than we thought previously as its sales resilience is supported by new categories and productivity improvements,” Mr Errington said as he increased his price target for Wesfarmers by $9 to $66.60. Kmart “is clearly a better quality business than we have given it credit for”, Citi added, as it upgraded Wesfarmers from a sell to neutral. According to Bloomberg, of the 17 analysts covering Wesfarmers, two rank it a buy and nine a hold, with some having wound back their recommendations because of the stock’s share rise over recent months,. Tales abound of the fortunes Wesfarmers has made for its early investors and the farmer-members who picked up shares when the former Westralian Farmers joined the stock market in November 1984. One, recounted in The West Australian, told of spendthrift former farmer Alf Jenkins. who left 400,000 Wesfarmers shares then worth $11m to his neighbours when he died aged 84 in 2003. The group’s strong shareholder returns have made Wesfarmers a popular retirement bulwark for West Australians since it came onto the ASX. Only plumbing products company Reece has generated better returns in the S&P-ASX200 than Wesfarmers since the 1984 stock market debut. On Bloomberg’s numbers, the stock has returned nearly 182,000 per cent, assuming the reinvestment of dividends. Up until Woodside’s scrip-based purchase of BHP Petroleum two years ago, Wesfarmers had the State’s biggest share register, with 511,500 shareholders as of June 2023, including 403,000 with less than 1000 shares. Woodside now has nearly 650,000 shareholders and Fortescue 166,400.