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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.
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.
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.
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%.
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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