Three small cap ASX consumer stocks to put on watchlist for 2022

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  • The consumer sector has underperformed the broader market in 2022.
  • However, small cap consumer stocks such as S66, ATP and DLC are off to a good start.
  • Investing in small caps should be done only after proper due diligence.

The Australian market has almost had a flat start to the year, with the benchmark ASX 200 index trading 0.1% down to 7436, as of 1:10 PM AEDT, 18 January 2022. However, during the same period, consumer stocks have underperformed so far. The ASX 200 Consumer Staples index (ASX:XSJ) is down 6.39% to 12,702.9, while the ASX Consumer Discretionary index (ASX:XDJ) is down 3.16% to 3,416.9, as of 1:10 PM AEDT.

Image Description: YTD Relative performance ASX 200 (Green) XDJ (Purple) & XSJ (Yellow)

Image Source: Refinitiv

Despite the sectoral underperformance, some consumer stocks have had a good year so far, especially in the small cap space. Let us have a look at three such ASX consumer stocks that have provided some profit cushion to investors in 2022.

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  1. Star Combo Pharma Limited (ASX:S66)

Star Combo Pharma is one of the leading food supplement manufacturers helping people to live a healthier life. Its product portfolio ranges from dietary supplements, vitamins and skincare products. The company has a market capitalisation of AU$43.04 million.

S66 shares have delivered a year-to-date (YTD) return of 21.15% to the last traded price of AU$0.32, as of as of 1:10 PM AEDT. In Q1 FY22, the company continued expanding into new territories and garnered a revenue of AU$5.8 million, slightly lower than AU$6 million clocked in the same period a year ago.

  1. Atlas Pearls Limited (ASX:ATP)

Atlas Pearls is an eco-pearling business having a niche in producing beautiful and highly sought-after silver and white South Sea pearls. It has six farms along with breeding and hatchery facilities spread across remote areas of Indonesian Archipelago. The company has a market capitalisation of AU$15.4 million.     

In FY21, the company turned profitable, clocking a net profit after tax of AU$6.72 million, compared to a net loss of AU$8.08 million in FY20 and AU$3.58 million loss in FY19. This year, the stock has delivered a total return of 20% to the last traded price of AU$0.036, as of 1:10 PM AEDT.

  1. Delecta Limited (ASX:DLC)

The last stock on our list, Delecta is a diversified business that operates through two business segments – the wholesale division sells adult products to wholesalers in the ANZ region, while the Exploration & Mining division pursues mining activities. Delecta has a market capitalisation of AU$14.4 million

DLC shares are up over 20% to AU$0.012 this year, as of 18 January 2022, 1:10 PM AEDT. Last month, the company received assays from its Rex project, which showed strongly anomalous uranium and vanadium results up to 0.53% U3O8 and 3.32% V2O5%.

Bottom Line

Although the consumer sector performance in 2022 has been on a lower side, but a few small cap consumer stocks have had a great run so far. However, investing in small cap companies is riskier than their large cap peers; therefore, investors must do proper due diligence before investing in them.

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