The share price of many of our leading companies in the S&P/ASX 200 Index (ASX: XJO) have been hit hard by the coronavirus pandemic over recent weeks, as the crisis deepens both locally and internationally. The heaviest hit industries have been the focus of a lot of market commentary, especially companies in the travel, tourism, and entertainment and leisure segments, following increasing actions by governments to stop the movement of people in order to stem the transmission of the virus.
Here we look at 2 ASX companies that will play a vital role as the coronavirus crisis unfolds, due to high demand for their essential goods at the moment. This also will position them well to ride out further share market volatility.
Metcash Limited (ASX: MTS)
Metcash owns and operates a number of supermarkets across Australia including IGA, Foodland and the Friendly Grocer.
Metcash has seen a big increase in demand for its products over the past few weeks as the coronavirus crisis escalates. Other major supermarket chains in Australia including Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Aldi are also seeing strong demand.
Initially, consumer panic buying was limited to sanitary items but has recently spread to a much wider range of goods, including fresh produce as well as other non-perishable food items such as pasta and rice. Supermarkets will continue to play a much more central and vital role in our society as non-essential food eateries are restricted or shut down. For example, on Sunday the Australian government has announced that all cafes and restaurants are to be temporarily closed, apart from take away service. More Australians will have no choice but to eat at home, and a regular trip to the supermarket will be vital.
A2 Milk Company Ltd (ASX: A2M)
a2 Milk is seeing high demand for all its products at the moment, especially for its infant formula and powered milk formula products, but also for its regular milk products, which are quickly being sold out. This demand looks set to continue over the next few months as the coronavirus crisis continues, both locally and internationally.
Although a2 Milk’s Chinese market was significantly impacted during January and February when the focal point of the coronavirus was in China’s Wuhan area, life is now getting back to normal in that region and other parts of China. This is likely to translate to increased Chinese demand, particularly through online and reseller channels.
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Motley Fool contributor Phil Harpur owns shares of A2 Milk. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.