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As share markets fall, what should investors have on their shopping list?

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Despite a brutal market sell-off long-term investors could be looking at these names in 2022.

It's not a secret that it's been a tumultuous start to 2022, but two industry experts highlight this can be an opportunity for investors to buy quality businesses at a lower price.

World markets are off to their worst start since WW2.

So far 2022 has seen the tech-heavy NASDAQ 100 fall into a bear market, down 23.96%.

At the same time, the S&P 500 is down 14.50%, and our very own market, the ASX 200 has fallen 6% year to date.

While the possibility of stagflation, higher interest rate risks, supply chain bottlenecks and conflicts in Europe continue to dampen market expectations, Morningstar's senior equities analyst Mark Taylor and analyst Angus Hewitt, remind investors that volatility creates opportunity.

"There is definitely a chance things will get much worse before they get better, but I think at that point investors will have a lot of opportunities to buy high quality stocks at a discount,'' Morningstar's analyst said.

What should be on your shopping list?

During the seminar, the duo points to a variety of shares that you should consider adding to your shopping list, if the current market falls continue.

Naming names, Hewitt highlights the likes of Bapcor, Aristocrat and Breville, which have all become expensive during last year's rally, as potential options.

"They are all good names, Invocar is another and potentially even the lotto corp" Hewitt said. "They are defensive, moaty companies."

While energy specialist Taylor said commodities could be the big winner in this current market environment.

"Nufarm is a company that is fundamentally buoyed by a long-term tailwind of population growth, rising living standards – which leads to a higher proportion of high quality food – and limits to available lands."

"Similarly, to the energy players, the Ukraine/ Russia situation, which is an unfortunate event, but there are some beneficiaries, with NuFarm being one of them because Ukraine is a major exporter of wheat and other crop style commodities," Taylor explains.

Taylor said the energy producers will continue to outperform even if share prices are not reflecting this growth.

Previous losers, tomorrow's winners?

Adding to your watch list are shares that have been previously beaten down.

The COVID-19 pandemic saw businesses heavily sold off over the last 2 years.

But equally, businesses have become more adaptive due to COVID, changing their models to fit in with modern life.

Ironically, according to Hewitt one of these companies is funeral services provider Invocare.

"It's been having a rough trot since the pandemic," he said.

"Social distancing, people washing their hands, all the measures to stop the highly contagious [COVID] disease has stopped another one, there has been no flu season."

The analyst notes while it has thankfully lowered Australia's mortality rate, it is impacting Invocare's bottom line.

"Compounding this is restrictions on funeral attendance. When funerals have a maximum capacity of 10 people they have moved to cheaper services with streaming services," he continues.

But Hewitt said since restrictions have eased, demand has returned.

Going further, the analyst also points to a2 Milk which was hit by closing borders, closing off China's daigou trade.

"I think a2 has fundamentally changed since COVID.

"The issue a2 has been having of late is the persistently high inventory levels through these reseller channels like daigou. So it's had high inventory levels which it's written off, to stop retailers discounting its brand." he said.

Hewitt believes the retail business which will benefit from reopening is less important than its expanding overseas sales.

"Out of COVID, it has been really focusing on its Chinese label business but even throughout the pandemic it has grown consistently within mother and baby stores and online retailers. We think this is more important," Hewitt concludes.

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