New record high: Is it too late to buy Wesfarmers shares?

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It’s been a delightful start to the trading week so far for ASX shares. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has gained a confident 0.54% and is back to around 7,670 points. But let’s talk about Wesfarmers Ltd (ASX: WES) shares. Â

Wesfarmers shares are having an even better day. The ASX 200 industrial and retail conglomerate closed at $68.31 a share last Friday. But this morning, those same shares opened at $68.51 before rising as high as $69.21 – a new all-time record high for Wesfarmers. The company has since cooled off a little but is still up a solid 1.08% at $69.05.

Today’s new high cements what has been a stellar run for Wesfarmers shares of late. At present, today’s gains put Wesfarmers shares up a happy 20.12% year to date, as well as up 24.1% over the past 12 months. Check that out for yourself below:

There have been no fresh announcements out of Wesfarmers today that might easily explain this new record high for the company. It’s possible that it represents a continuation of goodwill following last week’s Wesfarmers strategy day, which we covered over the weekend.

But investors are probably asking themselves today whether it’s too late to buy into Wesfarmers shares after the stonking gains that we’ve seen lately. Not to mention after today’s new record high. Let’s discuss that proposition.

Are Wesfarmers shares still a buy at a new record high?

I own Wesfarmers shares myself and regard the company as a high-quality investment. Wesfarmers has a long history of making lucrative deals on the share market, with savvy acquisitions like the Priceline pharmacy chain and the famous purchase and spinoff of Coles Group Ltd (ASX: COL).

However, I would not buy any additional Wesfarmers shares at the current pricing.

As a retail and industrial share, Wesfarmers tends to be a cyclical company. Over the past 12 months alone, the difference between Wesfarmers’ 52-week low ($46.64) and now-52-week high ($69.21) is approaching 50%.

As an aspiring value investor, I don’t think the current price is a bargain deal for this company, despite its inherent quality. We are seeing a price-to-earnings (P/E) ratio on Wesfarmers shares of 31.25 right now, which is fairly expensive in my view. The recent gains have also pulled Wesfarmers’ trailing dividend yield down to 2.81%, which is conversely historically low for this company.

I’d love to buy more Wesfarmers shares someday. But I think a better buying opportunity will present itself in the next 12 to 24 months.

I could well be wrong. But I think Wesfarmers’ long share price history tells us that the best time to load up on this ASX 200 veteran is when its shares go through a routine dip, not when they are pushing new all-time record highs.

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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Coles Group and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.