Investors pile into Wesfarmers

The stock gained 93c to a month's high of $27.98 as 451,712 shares changed hands. This followed an 80c gain on Monday.

The value of its diversified portfolio was showcased with a 28 per cent lift in first quarter profit to $101.4 million, up from $79.3 million a year earlier.

The result was achieved despite the effect of weaker coal and gas contributions, and concerns about the drought. The Bunnings hardware division was again a standout, with EBIT up 56 per cent to $78 million.

Market consensus was for a September quarter result of $95 million to $98 million, with many analysts yesterday finetuning their full-year forecasts.

Paterson Ord Minnett analyst Rob Brierley said the industrial conglomerate had been suffering from a ``a drought discount".

``What is driving earnings is the hardware division, which illustrates what a fantastic acquisition Howard Smith was for them."

Mr Brierley upgraded his full-year forecast from $489.5 million to $495 million and said the stock was trading ``at fair value" at around $27.80.

Wesfarmers managing director Michael Chaney said the drought was not expected to have an impact on the company's undisclosed full-year profit forecast, as only 15 per cent of the group's total earnings came from the rural sector.

Businesses affected include the fertiliser and chemicals division, rural and insurance arm and its 50 per cent stake in Australian Railroad Group, which carts grain in WA.

Other companies with exposure to the rural sector have had their prices slashed.