It may be time to sell Metcash Ltd (ASX: MTS) and A2 Milk Co Ltd (ASX: A2M) shares.
That's according to Catapult Wealth's Blake Halligan (courtesy of The Bull).
As we head into the Monday lunch hour, A2 Milk shares are down 0.5%, trading for $6.51 each, outpacing the 0.8% losses posted by the S&P/ASX 200 Index (ASX: XJO) at this same time.
Longer-term, shares in the ASX 200 dairy company have tumbled 21.5% over the past year, underperforming the 5.3% 12-month gains delivered by the benchmark index.
Those losses will have only been modestly eased by A2 Milk's 2.6% fully franked trailing dividend yield.
Turning to Metcash, shares in the ASX 200 wholesale food, liquor and hardware distributor are storming higher today, up 5.1% at $2.88 apiece.
Despite that strong performance, Metcash shares remain down 13.5% over 12 months. Metcash shares trade one a 6.3% fully franked trailing dividend yield.
Metcash is enjoying a strong runt today following the release of an unaudited first half trading update.
Metcash said it expects to achieve underlying profit after tax between $268 million and $270 million for the 12 months to 30 April. Management is forecasting revenue growth of 0.7%.
Which brings us back to…
Time to sell A2 Milk shares?
"A recent trading update revealed supply chain disruptions are constraining product availability despite strong underlying demand," Catapult Wealth's Halligan said.
He noted:
The company downgraded guidance in full year 2026, with revenue growth downgraded to low-to-mid double digits, with cash conversion falling to 50%. It expects lower infant milk formula sales, mostly related to Chinese labels.
Summarising his sell recommendation on A2 Milk shares, Halligan concluded:
The EBITDA percentage margin is forecast to decline from previous guidance of between 15.5% to 16% to between 14% to 14.5%. The shares have fallen from $9.24 on April 10 to trade at $6.67 on May 7. Better opportunities may exist elsewhere at this stage of the cycle.
Calling time on Metcash shares
Atop recommending selling A2 Milk shares, Halligan also issued a sell recommendation on Metcash shares.
"Metcash is a wholesale distributor across food, liquor and hardware," he said. "It services independent retailers across Australia."
Writing before the release of today's trading update, Halligan noted:
Group sales revenue was up just 0.1% in the first half of 2026 when compared to the prior corresponding period. Group underlying profit after tax fell 5.9%, reflecting lower earnings in hardware and liquor and increased finance costs.
Summarising his sell recommendation on Metcash shares, Halligan concluded:
The company operates in fiercely competitive industries. Higher interest rates may pressure its discretionary product sales and full year 2026 earnings, suggesting a re-allocation of capital. The shares have fallen from $4.23 on September 1, 2025 to trade at $2.76 on May 7.
The post Sell alert! Why this expert is calling time on Metcash and A2 Milk shares appeared first on The Motley Fool Australia.
Motley Fool contributor Bernd Struben 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026