Some key S&P/ASX 200 Index (ASX: XJO) shares have been chosen as opportunities by fund managers.
There has been a whole heap of volatility during the last few months as concerns have grown about inflation and rising interest rates.
Different businesses are being impacted in different ways by these impacts.
But, there are a few names that may actually be able to generate bigger profit in this environment.
The two fund managers – Geoff Wilson from Wilson Asset Management and Dr Philipp Hofflin from Lazard Asset Management – were talking to Livewire Markets and suggested that a recession is likely over the next year and a half.
But, Hofflin pointed out a couple of ASX 200 shares that could be worthwhile to own because they may be able to remain stable:
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Coles Group Ltd (ASX: COL)
Coles is one of the largest supermarket businesses in Australia with a market capitalisation of $25 billion according to the ASX.
The supermarket business was one of the picks by Hofflin. He actually picked both supermarket ASX 200 shares, Coles and Woolworths Group Ltd (ASX: WOW), but his preference is Coles.
Why Coles? The given reason was the fact that it has no debt and a "strong" balance sheet, according to the comments reported by Livewire.
Wilson said:
Look at the companies with good balance sheets, low levels of debt and the ones with strong business franchises as these have the potential to prosper, even in difficult times.
Woodside Energy Group Ltd (ASX: WDS)
Energy giant Woodside was another pick by Hofflin.
It was suggested that Woodside could be a good pick if there's a recession like the mid-70s when inflation was persistent.
Woodside is another ASX 200 share that has a minimal amount of debt after merging with the oil and gas division of BHP Group Ltd (ASX: BHP).
It was also noted that Woodside could be one of the ASX 200 shares to benefit from the energy supply issues.
Energy prices have been elevated since the Russian invasion of Ukraine, which could help revenue, net profit after tax (NPAT) and cash flow.
According to the estimate on CMC Markets, Woodside could pay an annual dividend per share of $3.63 in FY22. That translates into a grossed-up dividend yield of 16.3%. That would be among the largest yields paid in 2022 out of all the ASX 200 shares, aside from a few miners.
