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Forget cash! Here’s why I think ASX consumer staples shares are king

Are ASX consumer staples shares the new king in town?

Today, the S&P/ASX 200 Index (ASX: XJO) has gained around 0.52% to sit at 5,248 points (at the time of writing).

Despite this positive move, the ASX 200 is still down over 20% from its all-time highs we saw in February.

With the coronavirus still ongoing and recent ructions in the global economy such as the negative oil prices we saw earlier this week, I think it’s fairly safe to say we’re far from getting the all-clear on the economy.

Now, there’s an old saying that ‘cash is king’ for times like these. And to some extent, that’s true. Cash can help protect your portfolio from market volatility and can also enable you to take advantage of low share prices. But cash is also a lousy investment over the long term, especially with interest rates at zero unable to offset the effects of inflation.

That’s why I think a new king has ascended the throne – consumer staples shares.

These are the companies that sell the products that we all need to live in our modern world, such as food, drinks, cleaning products, and other household essentials.

One of the only things we know for certain in the age of coronavirus is how important these essentials can be. The run we saw on packaged food and hygiene products in February and March across the supermarkets of the country provoked widespread unease and sometimes downright panic.

Because of this, I believe the companies that make and sell these products are a safe-haven for ASX investors in these uncertain times.

Which ASX shares constitute consumer staples?

Well, the obvious choices are supermarkets like Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Metcash Limited (ASX: MTS) – which owns the IGA chain.

These companies have held up very well in the market turmoil we have seen in recent times, and I expect they will continue to do so. Earnings and dividends look to be on a stable ground, which is something not too many ASX shares (even blue-chips) can claim at the moment.

But there are also some other options.

Asaleo Care Ltd (ASX: AHY) is a consumer staples company behind many well-known brands, including Sorbent, Handee, and Libra. Asaleo shares are currently trading in the middle of their 52-week range at 97 cents a share today, with a trailing dividend yield of 2.05%.

You also have Coca-Cola Amatil Ltd (ASX: CCL). Amatil has suffered a dip in sales in recent times due to the closure of restaurants and other sales outlets for its products, but its world-famous brands remain a staple of many Australian households.

You can also consider a consumer staples exchange-traded fund like the iShares Global Consumer Staples ETF (ASX: IXI) as well.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET, iShares Global Consumer Staples ETF, and Woolworths Limited. 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.

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