'Attractive': 2 ASX 200 shares to buy right now from the boom sector for 2024

'People have to eat', says this expert, who is expecting big things from this consumer-facing industry.

| More on:
Two couples race each other in supermarket trollies, having a great time, smiling and laughing.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One critical action to take if you want your S&P/ASX 200 Index (ASX: XJO) shares to perform better than the market is to invest in stocks that others are ignoring.

After all, if you are only going for investments that everyone else is into, you can't expect to receive results different from the average.

Shaw and Partners portfolio manager James Gerrish recently told his Market Matters newsletter that consumer staples is the big play for his team in 2024.

"The Australian consumer staples sector has struggled over recent years, but as Market Matters looks to position portfolios more defensively, it's been on our radar of late," he said.

"People have to eat."

This might be considered a contrarian view, as many experts are forecasting a reduction in interest rates. That would boost public confidence and spending, which would conventionally be considered a boon for the consumer discretionary sector.

But Gerrish likes staples for similar reasons.

"With interest rates set to fall through 2024/5, inflation under control and supply chain issues in the rearview mirror, the outlook has improved for the sector. 

"The peak cost of living has passed, with spending growth on the horizon, helped by solid immigration, with supermarkets  likely to be a key beneficiary."

Helpfully, he also picked out two ASX 200 stocks from the industry that are ripe for buying now:

'An opportunity' imminent?

On Thursday, groceries distributor Metcash Limited (ASX: MTS) confirmed it is in discussions to acquire the Superior Food Group business from private equity owner Quadrant.

Metcash shares were immediately placed in a trading halt.

Gerrish reckons there could be a major buying opportunity opening up if the $500 million transaction goes ahead.

"Speculation has been around the funding of the purchase, with many expecting a capital raise should the deal progress," he said.

"At this stage, Metcash has several alternatives from a funding perspective, but if they do undergo a discounted equity raise as part of a wider funding package, it could provide an opportunity in the stock."

Gerrish's team is "long and bullish" on the owner of the IGA supermarket brand.

These ASX 200 shares are looking cheap

Woolworths Group Ltd (ASX: WOW) shares have gone largely sideways over the past three years.

With cost-of-living pressures bearing down on many Australian households, politically the company and its rival Coles Group Ltd (ASX: COL) are in strife.

"The ACCC is investigating 'price gouging', which will inconvenience Woolworths."

The Woolies stock price has also dipped this year because of a $1.7 billion write-down of its New Zealand supermarket business. 

Gerrish's team reckons this trough makes the stock "even more attractive".

"When we saw the banks endure a Royal Commission, it ultimately delivered an excellent buying opportunity.

"If Metcash raises capital, it may create some sentiment selling across the sector."

His analysts like Woolworths as a buy below $36.

It closed Friday at $36.44.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Investing Strategies

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Brokers say these ASX dividend shares are top buys

These shares have been given the thumbs up by analysts.

Read more »

Multiracial happy young people stacking hands outside - University students hugging in college campus - Youth community concept with guys and girls standing together supporting each other.
Blue Chip Shares

5 ASX 200 blue chip shares to buy in FY26 with $5,000

Analysts think these shares could be top picks for the new financial year.

Read more »

A couple lying down and laughing, symbolising passive income.
Dividend Investing

I'd buy 9,600 shares of this ASX 200 stock to aim for $200 a month of passive income

Want regular income? This could be a great stock to buy.

Read more »

Happy young couple saving money in piggy bank.
Dividend Investing

Buy these strong ASX dividend stocks for passive income

Brokers rate these shares as buys for passive income.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Growth Shares

3 exciting ASX 200 growth shares to buy in July

Brokers think these shares could be top picks for growth investors.

Read more »

A elder man and woman lean over their balcony with a cuppa, indicating share rpice movement for ASX retirement shares
Small Cap Shares

Why I think this ASX small-cap stock is a bargain at 58 cents

This stock looks like a great buy, in my opinion.

Read more »

A woman is excited as she reads the latest rumour on her phone.
Cheap Shares

3 popular ASX stocks that look dirt cheap right now

Let's see which shares analysts think are being undervalued by the market.

Read more »

A man thinks very carefully about his money and investments.
Dividend Investing

Buy Fortescue and these fantastic ASX dividend shares with $5,000

These shares have been named by brokers as buys for income investors. Let's see what they offer.

Read more »