The Santa rally will once again make an appearance on share markets, according to many experts.
This is the historical pattern of ASX shares rising heading into December and the end of the calendar year.
The logic for that to repeat in 2022 seems to be that the market can see brighter days after a tough year. After steep interest rate rises, optimism abounds that inflation will be sufficiently slayed for the central banks to take a chill pill in 2023.
But it's not just about buying up ASX shares indiscriminately.
It helps if the business itself has drivers that will boost its performance. There is no outperformance if a stock is just relying on the overall tide to rise again.
As such, Tribeca portfolio manager Jun Bei Liu had an idea.
"I do like to look at things when they get sold off quite a bit," she told Switzer TV Investing.
"And one of the interesting sectors is… the supermarkets. They have been sold off a lot."
Image source: Getty Images
Share prices at 'attractive levels'
Indeed, both the Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) share prices have sunk about 15% since mid-August.
For Liu, "a large supermarket to be down this much" opens up a nice buying opportunity.
"Clearly they are COVID beneficiaries, we know. But the share price is actually coming down to reasonably attractive levels," she said.
"For Coles, it's under 20 times — something like 18 times earnings."
Regardless of interest rate rises biting Australian households, Liu feels like grocery spend will be spectacular heading into summer.
"These supermarkets will have a very good Christmas, because it's the first Christmas that we can actually celebrate without any form of restrictions."
"Supermarkets… look pretty attractive at this point."
Moreover, Liu feels like the stock market generally is on the cusp of a bull run.
"I think we're getting very very close to that bottom of the market now," she said.
"Remember, share markets are always forward-looking. And we're probably, looking at the economic data, [getting] to the worst by early next year."
To add to the attraction, Woolworths hands out a 2.75% dividend yield while Coles pays 3.8%.
