2 ASX Shares Showing Value Opportunities: Santos Ltd and Wesfarmers Ltd

April 28, 2025 12:38 PM AEST | By Team Kalkine Media

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2 ASX Shares Showing Value Opportunities: Santos Ltd and Wesfarmers Ltd — Image source: shutterstock

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Highlights

Santos Ltd (STO) faces challenges amid emission concerns

Wesfarmers Ltd (WES) strengthens operations through retail leadership

Dividend yields provide insights into valuation trends

Investors often seek resilient companies during uncertain times, and two names standing out on the ASX radar are Santos Ltd (STO) and Wesfarmers Ltd (WES).

Santos Ltd (ASX:STO): Navigating Challenges in the Energy Sector

Santos Ltd has long held a leading position among Australia's oil and gas producers. Established in the 1950s, the company has built a strong portfolio of energy assets, including expansive oil and gas fields and an intricate network of pipelines and facilities. The name "Santos" itself reflects its early ambition — an acronym for South Australia Northern Territory Oil Search.

In recent times, Santos Ltd has been at the centre of scrutiny surrounding its climate action strategies. Legal challenges have questioned the company's environmental targets, particularly its focus on achieving net-zero Scope 1 and 2 emissions by 2040. Notably, Scope 3 emissions, which represent over 75% of the company's total emissions, are not included in the current goals, raising concerns among climate advocacy groups.

Despite the headwinds, Santos Ltd offers a dividend yield of approximately 6.32%, standing above its five-year average of 4.64%. However, the recent decline in dividends compared to its three-year average suggests that the share price movements and payout trends should be interpreted with caution. Since the start of 2025, the Santos share price has declined by 13.1%, a factor that may influence overall yield calculations.

Wesfarmers Ltd (ASX:WES): Strong Foundations Across Multiple Sectors

Wesfarmers Ltd has evolved into one of Australia's most diversified conglomerates. Founded in 1914 and based in Perth, its business interests span retail, chemicals, fertilizers, and industrial safety products. Many consider Wesfarmers to function much like a publicly listed private equity company, acquiring, optimizing, and eventually spinning off businesses to create long-term value.

A significant success story includes the acquisition and later demerger of Coles Group. However, Wesfarmers’ dominant strength today lies in Bunnings, Australia’s top hardware and home improvement chain, which generates over 50% of the group’s operating profit. The company's strategic expansion into Bunnings dates back to 1987, with full ownership secured in 1994.

Currently, Wesfarmers Ltd shares are trading about 20.1% above their 52-week lows, highlighting a potential recovery trajectory. The company's steady operational performance across a range of sectors positions it as a notable player on the ASX.

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