Images of panicked shoppers rushing into the supermarket chains have helped the sector outperform the S&P/ASX 200 Index (Index:^AXJO) during the COVID-19 pandemic.

The question investors are facing is what happens as the paranoia dies down and fears of the sky falling eases.

In other words, are ASX shares in the consumer staples sector about to wake with a bad hangover?

Structural changes

The good news is that changes to consumer behaviour is likely to endure even as world gets the coronavirus disaster under control.

UBS identified three trends that will shape the fortunes of the grocery sector and highlighted the winners and losers from the changes.

Online boom

The big shift to online buying is an easy one to pick. Consumers aren’t only using the web to shop for clothes and electronics, but are embracing online grocery deliveries during the lockdown.

This is unlikely to change post COVID-19. History has shown that once consumers embrace a new channel, they are likely to stick to it as habits are hard to reverse.

Our two largest supermarkets, Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW), are best placed to benefit from this trend. Competitors Aldi and Metcash Limited (ASX: MTS) aren’t.

Increasing appetite for eating in

The second trend is change in eating occasions. UBS believes Aussies will be eating at home more instead of dining out.

Growing levels of joblessness and closures of restaurants that cannot survive the coronavirus lockdown will keep this trend going over the medium-term, if not longer.

The broker estimated that every 0.1 times increase in at-home cooking frequency equates to around a 1% increase in grocery sales.

Bargain products in vouge

The third trend is the move to value brands. This is again linked to the weakening economy, although UBS thinks premium health products with a clear point of differentiation are well placed to benefit too.

Based on these three lasting changes to spending habits, the broker believes Woolworths, Coles, A2 Milk Company Ltd (ASX: A2M) will be the winners in the sector.

On the flipside, Coca-Cola Amatil Ltd (ASX: CCL) will be a loser as its beverages are aimed at the higher end of the market, while grocery distributor Metcash Limited (ASX: MTS) lacks the online component.

The experts at the Motley Fool have identified other ASX stocks that are likely to outperform in the coronavirus recovery.

Click on the link below to find out what these shares in their free report.

More reading

• 3 safe and strong ASX dividend shares to buy today
• These 3 ASX 200 retail shares are absolutely thriving right now
• 3 high quality ASX shares for a retirement portfolio
• Is the Woolworths share price a buy?
• Buy these 4 ASX shares to survive the pandemic

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Woolworths Limited. 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.

The post UBS picks the real ASX winners from the COVID-19 grocery boom appeared first on Motley Fool Australia.

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The phrase ‘buy-and-hold’ is often derided as the most basic form of investing in ASX shares. It’s easy to understand and requires little ongoing effort to execute. For these reasons, it’s sometimes ragged upon.

But the ‘buy-and-hold’ strategy has many famous spruikers – including the great Warren Buffett. Buffett even once famously said that his favourite time to sell a share is ‘never’.

So is there merit to this view?

Benefits of buy-and-hold

The main reason so many investors find the buy-and-hold strategy a superior one is due to the fact it bypasses the psychological foibles of being human. See, we’re often our own worst enemies when it comes to investing.

We have a tendency to want to buy more shares if one of our companies goes up in value – and buy even more if it continues to rise.

Conversely, we also have a nasty habit of pushing the sell button when our companies’ share prices fall – especially during a market crash or other kind of panic.

Both of these behaviours violate that most basic law of good investing – buy low, sell high.

And that’s where ‘buy-and-hold’ really helps us out. If you go into investing with a ‘I’ll never sell’ attitude, the likelihood of ‘doing something stupid’ (as Buffett would put it) is far lower.

Another (far greater) benefit of the buy-and-hold approach comes from the magic of compound interest. The best companies in the world are exceptionally good at taking their profits and reinvesting them at high rates of return for even higher profits down the road. That’s partly how CSL Limited (ASX: CSL) was able to grow so fast over the past two decades.

If you buy a company like this, and just hold it over a long period of time, you’ll almost certainly be better off than trying to dip in and out.

Finally, it’s worth noting that buying and selling shares isn’t free. There are transaction fees like brokerage to consider, as well as taxes. Buying-and-holding negates many of these extra burdens – leaving more cash in your pocket at the end of the day.

Risks of buying-and-holding

Of course, no strategy is perfect and this one is no different. Buy-and-hold can be great if you’ve found a winner like CSL. But if you pick a lemon and don’t cut your losses, you can end up losing far more capital than if you got out early. Ergo, buy-and-hold only works with winners (and arguably index funds).

Foolish takeaway

The buy-and-hold strategy is one that I think has a lot of merit, and one I employ myself to a degree as an investor. However, it’s not an excuse to be apathetic with your shares. Buying-and-holding a company into the ground can be a costly mistake. You still have to make sure your company is ahead of the game and has what it takes to stay ahead!

More reading

• In a post-COVID world, could Australia be the next superpower?
• ASX 200 Weekly Wrap: New ASX bull run continues
• 3 of the best ASX 200 shares to buy and hold for 10 years
• Why I’d buy and hold CSL shares forever
• How to find winning ASX shares in a recession

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The post Is ‘buy-and-hold’ the best way to invest in ASX shares? appeared first on Motley Fool Australia.

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