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4 ASX 200 stocks unphased by the May selloff

Wed 11 May 22, 3:06pm (AEST)
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Key Points

  • Defensive sectors have outperformed cyclical industries in 2022
  • CSL is picking up after a prolonged period of underperformance against the ASX 200
  • Coles and Endeavour Group are both within an arms reach of all-time highs

"Sell in May and go away" has lived up to its name, with the S&P/ASX 200 down around -7.2% in just eight trading sessions.

Defensive sectors have strongly outperformed growth-related stocks, with a number of ASX 200 companies hardly phased by the selloff and panic.

The defensive rotation reflects the desire to hold stocks with strong cashflows and dividends amid a rising interest rate environment.

Here are four stocks that have managed to stand tall this month.

#1 CSL 

CSL (ASX: CSL) is finally showing off its market darling status after a prolonged period of underperformance against the ASX 200.

CSL received 4 Buy-rated notes from brokers including Citi, Macquarie, Morgan Stanley and Ord Minnett in April. The average price target was $316.87.

The positive takeaways include:

  • Estimates that plasma collections will return to pre-covid levels in the second-half of FY22

  • Leverage market position in iron deficiency and chronic kidney disease markets

From a technical perspective, CSL's price action has been constructive.

While subject to some understandable intraday volatility, CSL shares have been tightening around the $270 level. The stock is currently trying to break out of its 3-month trading range and pushing the 200-day moving average.

CSL 2022-05-11 13-55-27
CSL price chart (Source: TradingView, Annotations by Market Index)

#2 Coles 

It looks like the 'everyone still needs groceries during a recession' logic is holding up for Coles (ASX: COL).

The stock is within 5% of all-time highs and again, completely unphased by the broader market.

Coles' third quarter update was solid, with Group sales up 3.6% to $9.1bn, slightly ahead of consensus expectations.

Encouragingly, management observed that covid-related costs were trending lower and supply chain issues were beginning to improve.

COL 2022-05-11 14-13-46
Coles weekly price chart (Source: TradingView)

#3 QBE Insurance

QBE (ASX: QBE) is leveraged to benefit from higher interest rates.

QBE shares rallied 5.5% last Thursday, 5 May after reporting 19% growth in gross written premiums and a negligible impact from the Ukraine conflict and flooding across Australia's east coast.

QBE shares are again, unchanged in May and trading close to 2 year highs.

QBE 2022-05-11 14-22-55
QBE weekly price chart (Source: TradingView)

#4 Endeavour Group

Endeavour (ASX: EDV) is another name within an arms reach of all-time highs.

The company's March quarter trading update saw retail sales fall -3% to $2.3bn and hotels sales rose 3.8% to $405m.

The bipolar business segment earnings reflect a shift from covid-induced home consumption back to pub consumption and pend up demand for travel accommodation.

While March quarter revenues were slightly ahead of broker expectations, consensus views the stock as a Hold with a $7.28 target price.

Macquarie pointed out that Endeavour is trading around a price-to-earnings of 29 compared to Coles' 25.

EDV 2022-05-11 14-45-49
Endeavour weekly price chart (Source: TradingView)


Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University and was Vice President of the University Network for Investing and Trading (UNIT). He is an avid swing trader, and drawn to breakouts and technical set ups. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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