This year will be a Christmas like no other. The year when “all of the ships come back to the shore“, as we sing in I Still Call Australia Home. A report from Credit Suisse Group analyst, Grant Saligari, predicts the nation’s population will swell by 4% at Christmas due to travel restrictions and the COVID-19 pandemic. In other words, an extra million people will be in Australia this Christmas, a phenomenon that I believe is very important for anyone considering which ASX shares to buy now.
Not only have scores of us returned home from expat jobs and international lives, many more simply cannot travel over Christmas. In my home state of Western Australia, we are already feeling the impact of this as rents rise back to boom time prices. For investors, I believe the Christmas period presents a range of opportunities, but in particular, in the food and gift sectors.
Retail staples shares to buy
The first thing that comes to mind with more Australians within our borders is, of course, food. In this space, I think Coles Group Ltd (ASX: COL) is one of the better opportunities. Personally, I remain skeptical of Woolworths Group Ltd (ASX: WOW) shares after the company’s absurd decision to build the Masters franchise, and compete head to head with Bunnings. The Coles share price also has a lower price-to-earnings (P/E) ratio and higher trailing 12-month dividend yield than Woolies. Personally, I think Coles is the best choice of supermarket ASX shares to buy now.
Having said that, I feel another good share to buy in the supermarket space is Metcash Limited (ASX: MTS). This retail conglomerate owns the franchised chain IGA, as well as other brands in liquor sales, hardware, and tool sales. However, the distributed ownership model makes campaigning and marketing difficult. Moreover, IGA in particular hasn’t nailed home delivery. However, it is still a respectable third force in supermarket retail, particularly in convenience shopping.
Consumer discretionary shares
I think that one of the major discretionary shares to consider buying for the Christmas period is Super Retail Group Ltd (ASX: SUL). This company has a great collection of brands encompassing outdoor equipment, personal sports equipment and clothing, as well as the car service company – SuperCheap Auto. All good Christmas gift ideas for a swollen population.
Some other consumer discretionary companies to watch include jewellery chain Michael Hill International Ltd (ASX: MHJ), fast fashion store Lovisa Holdings Ltd (ASX: LOV), and women’s retail clothing outlets City Chic Collective Ltd (ASX: CCX). All of these are likely to see increased sales volumes over the Christmas period resulting from both gift buying and personal shopping.
For me however, I have long been a fan of Accent Group Ltd (ASX: AX1), and I think this is a great discretionary retail ASX share to buy for Christmas. As a father of two teenage kids, let me assure you that kids love sneakers. Also, price doesn’t seem to faze them when it comes to writing up their Christmas lists. From the market low point on 23 March, the Accent Group share price has risen by 226.7%. It is currently selling at a P/E ratio of 18.4, and has a trailing 12-month dividend yield of 5.05%.
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Returns as of 6th October 2020
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Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Accent Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.