Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW) shares are popular options for blue chip investors.

Both are high quality businesses with a collection of recognisable brands.

Wesfarmers is the name behind Bunnings, Kmart, Target, Officeworks, Priceline, Silk Laser Clinics, and WesCEF, to name just a few.

Whereas Woolworths Group operates businesses such as the eponymous Woolworths supermarket brand, Big W, Petstock, and PFD Food Services.

Given how their businesses overlap in many ways, having just one of them in a portfolio makes sense. But which one should you buy right now? Let’s see which one Goldman Sachs rates as the buy.

According to recent notes, Goldman Sachs thinks that Woolworths shares are the standout pick of the two.

It currently has a conviction buy rating on its shares with a price target of $40.20. This implies potential upside of 17% for investors over the next 12 months.

The broker believes that share price weakness over the past year has created a compelling buying opportunity in a high quality company with defensive earnings. It commented:

WOW is the largest supermarket chain in Australia with an additional presence in NZ, as well as selling general merchandise retail via Big W. We are Buy rated on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as its ability to pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock.

Goldman isn’t feeling as positive about Wesfarmers’ shares. It currently has a neutral rating and $68.80 price target on its shares. This suggests that upside of just 2.2% is possible from current levels.

While the broker is a fan of the company, and particularly the Bunnings business, it just doesn’t see enough value in its shares at current levels. It explains:

Wesfarmers is a conglomerate that operates across a range of industries with ~65% of EBIT coming from Bunnings, a household hardware chain. We expect Bunnings to be more resilient vs. other household related retailers, with buoyant median house price expectations signaling higher property transactions/alts & adds to come. Additionally, we also expect a resilient Bunnings to generate ~A$2.0B of free cash flow each year to FY26 to further fund two new growth platforms with 1) Health, including further scaling into high growth and high margin non-invasive aesthetics business; and 2) Lithium, with high quality, low cost and access to capital a notable advantage. That said, WES in our view is now fairly priced to reflect these growth prospects. We are Neutral rated on the stock.

So, as far as Goldman Sachs is concerned, Woolworths shares are the way to go for blue chip investors.