Metcash Limited (ASX: MTS) shares slumped 20.95% lower in April despite the S&P/ASX 200 Index (ASX: XJO) having its best month since 1988.
Why did Metcash shares slump lower in April?
I've always found Metcash to be one of those funny ASX 200 shares to value. The group owns and operates the IGA supermarket chain here in Australia and had a bumper start to the year.
One of the biggest factors was the coronavirus pandemic. Unlike most of its ASX 200 peers, Metcash shares actually climbed higher as the pandemic response took shape. That's largely because restaurants and cafes shut down and panic buying was everywhere.
With so many shoppers desperate for supplies, Metcash's IGA supermarkets saw a surge in trade. Normally IGA plays third fiddle to larger competitors run by Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW).
That wasn't the case in March, however, as shoppers searched far and wide for toilet paper and other supplies. But with the uncertainty and fear starting to fade, Metcash shares slumped 20.95% lower in April to $2.49 per share.
I think that's because things are starting to go back to the way they were, at least in terms of the Aussie supermarkets. Shoppers are seeing well-stocked shelves in Coles and Woolworths, with IGA once again playing third fiddle.
That's bad news for investors with Metcash shares now down 3.11% for the year. For context, Coles and Woolworths shares have moved 2.31% and -1.13%, respectively, since the start of the year.
Are ASX supermarket shares a good buy in 2020?
I don't think we'll see the same surges that we saw in February and March. However, I still think Aussie supermarket shares could be a good defensive buy in 2020.
Uncertainty remains and the pandemic is far from over. In the meantime, I would expect Metcash shares to climb higher on the back of some solid sales. Personally, it looks like Coles and Woolworths could be the real beneficiaries but I think Metcash could still outperform the ASX 200 benchmark this year.
