With the S&P/ASX 200 Index (ASX: XJO) losing significant ground over the past few weeks, and few companies spared from share price falls, many investors are feeling understandably very anxious.
Here, we examine two ASX shares that I believe are well placed to ride out any further market volatility in the months ahead, and are also positioned for long term growth.
Coles Group Ltd (ASX: COL)
Coles has seen a big increase in demand for its products over the past few weeks as the coronavirus crisis escalates. Initially, consumer panic buying was limited to sanitary items but has recently spread to a much wider range of goods including fresh produce such as milk, eggs and meat, as well as other non-perishable food items such as pasta and rice. Other supermarkets benefiting from the coronavirus crisis include Woolworths Group Ltd (ASX: WOW) and Metcash Limited (ASX: MTS).
Strong demand looks set to continue over the coming weeks and possibly months, as more workers stay home and children potentially stay away from schools. Also, more families will be eating and cooking their meals at home instead of dining out or ordering take-away, which will require greater than normal amounts of food and other items purchased from supermarkets.
This has translated into high resilience in the Coles share price recently. While the ASX 200 has lost well over 30% of its value since the current market slide began on February 20, the Coles share price has actually increased slightly during this period.
The surge in demand for Coles' goods appears set to continue over the next few months, as the company looks far better positioned than most ASX shares to ride out any economic storm clouds. Over the longer term, I think that Coles is well placed for solid growth due to strong management and Australia's growing population.
Along with growth potential, Coles shares currently offer a trailing dividend yield of 3.22%, which grosses up to 4.6% with full franking.
Transurban Group (ASX: TCL)
Transurban is a company that has gained a reputation as a stable ASX dividend payer. This has led to a strong lift in the Transurban share price over the past few years.
The spread of the coronavirus in Australia could potentially lead to fewer cars and other vehicles on our roads. However, I think any reduction would only be short-term and lower compared to most other market sectors. Also, some commuters may choose to travel by car rather than by public transport in crowded trains and buses.
In Transurban's 1H20 results released in February, the toll road provider announced that its earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 9.5% during the half to $1,094 million.
With strong share price gains over the past few years, Transurban is currently trading with a relatively high price-to-earnings (P/E) ratio. However, I still believe that Transurban is a reasonable buy for investors, especially if high share market volatility continues in the months ahead. Transurban shares currently trade with a trailing dividend yield of 5.81%.
