It may be time to sell Metcash Ltd (ASX: MTS) and A2 Milk Co Ltd (ASX: A2M) shares.
That's according to Catapult Wealth's Blake Halligan (courtesy of The Bull).
As we head into the Monday lunch hour, A2 Milk shares are down 0.5%, trading for $6.51 each, outpacing the 0.8% losses posted by the S&P/ASX 200 Index (ASX: XJO) at this same time.
Longer-term, shares in the ASX 200 dairy company have tumbled 21.5% over the past year, underperforming the 5.3% 12-month gains delivered by the benchmark index.
Those losses will have only been modestly eased by A2 Milk's 2.6% fully franked trailing dividend yield.
Turning to Metcash, shares in the ASX 200 wholesale food, liquor and hardware distributor are storming higher today, up 5.1% at $2.88 apiece.
Despite that strong performance, Metcash shares remain down 13.5% over 12 months. Metcash shares trade one a 6.3% fully franked trailing dividend yield.
Metcash is enjoying a strong runt today following the release of an unaudited first half trading update.
Metcash said it expects to achieve underlying profit after tax between $268 million and $270 million for the 12 months to 30 April. Management is forecasting revenue growth of 0.7%.
Which brings us back to…
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Time to sell A2 Milk shares?
"A recent trading update revealed supply chain disruptions are constraining product availability despite strong underlying demand," Catapult Wealth's Halligan said.
He noted:
The company downgraded guidance in full year 2026, with revenue growth downgraded to low-to-mid double digits, with cash conversion falling to 50%. It expects lower infant milk formula sales, mostly related to Chinese labels.
Summarising his sell recommendation on A2 Milk shares, Halligan concluded:
The EBITDA percentage margin is forecast to decline from previous guidance of between 15.5% to 16% to between 14% to 14.5%. The shares have fallen from $9.24 on April 10 to trade at $6.67 on May 7. Better opportunities may exist elsewhere at this stage of the cycle.
Calling time on Metcash shares
Atop recommending selling A2 Milk shares, Halligan also issued a sell recommendation on Metcash shares.
"Metcash is a wholesale distributor across food, liquor and hardware," he said. "It services independent retailers across Australia."
Writing before the release of today's trading update, Halligan noted:
Group sales revenue was up just 0.1% in the first half of 2026 when compared to the prior corresponding period. Group underlying profit after tax fell 5.9%, reflecting lower earnings in hardware and liquor and increased finance costs.
Summarising his sell recommendation on Metcash shares, Halligan concluded:
The company operates in fiercely competitive industries. Higher interest rates may pressure its discretionary product sales and full year 2026 earnings, suggesting a re-allocation of capital. The shares have fallen from $4.23 on September 1, 2025 to trade at $2.76 on May 7.
