A Glance at Three Consumer Stocks amid the Evolving Consumer Buying Pattern

Summary

  • The COVID-19 pandemic has brought significant changes in the customers’ buying behaviour and made retailers think about what they needed to do to adapt to the change.
  • Treasury Wine made significant progress since its listing. However, it experienced challenges due to COVID-19, China tariffs, and fires.
  • Tassal Group recently acquired Mid Farm.
  • Synlait Milk experienced a significant loss post-COVID-19 outbreak. It expects its loss to range from AU$20 million to AU$30 million in FY2021.

Consumer stocks comprise those goods that people use for their daily needs like food, beverages, and hygiene items. Irrespective of one’s financial position or even in an economic crisis, people cannot eliminate these items from their list. Hence, consumer players have been able to maintain sustainable growth despite the prevailing market conditions.

Strengthen your Portfolio with Kalkine LITE; Now Available at $19.99 Only

Source: © Rms164| Megapixl.com

In 2020, due to the toilet paper panic buying during the initial phase of the COVID-19 outbreak, the retailers understood the changing behaviour of the customers and what they need to adapt. In 2021, the consumer product industry has entered with more confidence to have better revenue growth.

The COVID-19 outbreak has made consumer product industry executives execute their business strategy in the upcoming year. There would be others factors too that would have a major role to play here. These include safety restrictions, vaccine deployment, fiscal support, virtual schooling and work, consumer psychology and adhesiveness to the new changed habits.

Empty shelves due to panic buying (Source: © Germansilk100 | Megapixl.com)

Some known names from this space include Treasury Wine Estates (ASX:TWE), Tassal Group (ASX:TGR), Synlait Milk (ASX:SM1), Keytone Dairy Corporation (ASX:KTD), Digital Wine Ventures (ASX:DW8), The A2 Milk Company (ASX:A2M), and United Malt Group (ASX:UMG). This article would look at a couple of from the consumer staples space and see how they are presently positioned.

Treasury Wine Estates Limited (ASX:TWE)

Premium focused & consumer-led global wine business, Treasury Wine Estates Limited made its ASX debut on 10 May 2011 and has delivered a return of 241.16% since then. TWE shares started moving south around mid-March but have recovered in the last couple of weeks. The shares closed at AU$11.050 on 24 May.

In the last couple of years, the Company has made strategic acquisitions, including Diageo Wine in 2015 and vineyard assets in  Bordeaux, France, to accelerate its business.

During the COVID-19 pandemic, the Company showed its resilience despite dealing with several external factors like COVID-19, China tariffs, and fires. In 2021, the Company divested many commercial portfolio brands in the US.

ALSO READ: Treasury Wine Estates (ASX:TWE) to implement provisional measure on wine imports into China

At present, the Company has increased its focus and accountability to unlock its long-term growth potential. TWE would focus on top-line growth along with high-single-digit average earnings growth over the long term.

Tassal Group Limited (ASX:TGR)

Tassal Group Limited, a vertically integrated salmon and prawn grower made its ASX debut on 12 November 2003, delivering a return of ~395%. On 24 May 2021, the shares closed at AU$3.600, down 1.640%.

The Company recently acquired Mid Farm, an 800-hectare property near the Company’s current Proserpine prawn farm and Billy Creek property. Through this acquisition, the Company would integrate its farm holdings to strengthen upcoming prawn production.

Source: © Thelatin10| Megapixl.com

TGR has also sold all excess land at Exmoor Station. It has preserved the most productive & economic land parcels at Exmoor Station for upcoming farming development.

INTERESTING READ: Would you look at these 3 ASX-listed dividend stars?

Synlait Milk Limited (ASX:SM1)

Synlait Milk Limited, the dairy manufacturer that concentrates on supplying higher value dairy products, started its ASX journey on 25 November 2016. The Company made significant progress before the COVID-19 outbreak. However, the pandemic had a major impact, and the Company continues to witness a fall in its share price. From January 2020 till date, the shares have delivered a negative return of ~66%. On 24 May 2021, the shares last traded at AU$2.820, down 5.686%.

Synlait Milk shares have had a challenging year and a half on the ASX (Source: © Thelatin10| Megapixl.com)

On 24 May 2021, the Company released its FY2021 guidance and highlighted the risks impacting the Company’s performance. These include:

  • Ongoing shipping delays.
  • Achieving lower prices for ingredient products.
  • Implementation of a more conservative method to year-end inventory volumes & valuation.

The Company expects its net loss to range from AU$20 million to AU$30 million in FY2021.

Comment


Disclaimer

Ad

GET A FREE STOCK REPORT


Top Penny Picks under 20 Cents to Fit Your Pocket! Get Exclusive Report on Penny Stocks For FREE Now.


   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK