Social media and news headlines across Australia have been flooded with images of empty supermarket shelves as consumers swarm to stockpile on goods. The panicked buying is the result of rising concerns of a possible coronavirus pandemic.
Consumers have been loading up on essentials such as meat, long-life products, and even toilet paper. Instead of joining the panic, here are 3 ASX shares you could be buying instead.
Woolworths Group Ltd (ASX: WOW)
As Australia's largest retailer, Woolworths could be well poised to benefit from the buying hysteria. Late last month, Woolworths saw group net profit for the half-year decline 8% to $887 million whilst revenue rose 6% to $32.4 billion.
The supermarket giant cited the recent bushfire crisis and a worker pay scandal as reasons for weaker performance. However, increased consumer buying could see Woolworths recover, with the retailer focusing on building up enough stock for hygiene items such as hand sanitisers and disinfectants.
Coles Group Ltd (ASX: COL)
Coles recently addressed the increased demand for products, stating that the company had increased the number of deliveries to stores this week. A spokesperson from the company advised that Coles had increased store deliveries on popular products such as long-life pantry staples and healthcare products.
A recent note from equity analysts at Credit Suisse also painted a bullish outlook for the Coles shares price. According to the report, analysts continue to see value in Coles shares and forecast continued earnings growth if the supermarket operator develops its range. Analysts also slapped an improved share price target of $17.80 per share.
A2 Milk Company Ltd (ASX: A2M)
The coronavirus outbreak could actually benefit the share price of infant formula producers like a2 Milk. Despite the doom and gloom and reduced foot traffic, a2 Milk could see a surge in online orders. The thesis behind this is that as Chinese consumers are encouraged to stay at home, online orders could surge as households look to stockpile on products.
The a2 Milk share price has remained resilient despite the market carnage. The infant formula company recently reported a strong performance for the half-year, fuelled by strong sales growth in China. Management believes that a2 Milk's products will continue to be in strong demand among Chinese families, particularly through online and reseller channels. As a result, a2 Milk expects its earnings before interest, tax, depreciation and amortisation (EBITDA) margin to remain in the 29% – 30% range for the full year.
Should you buy?
In my opinion, it is pure speculation to buy these stocks on the back of consumer hysteria. I think a more prudent strategy would be to keep these stocks on a watchlist and look for similar opportunities.
