It is one of the old adages of the investment world: when the economy and the stockmarket start to turn down, buy the shares of supermarket companies and food producers. We all have to eat, goes the argument, so these shares are likely to hold up when others falter.

This view is finding a degree of support in the present market, with some fund managers and stockbrokers advocating an overweight position in these stocks, along with those from companies that provide other daily necessities of life, such as in the health-care sector.

Andrew King, a portfolio manager with Concise Asset Management, says that his firm is overweight in the consumer staples sector, which includes food and beverage producers as well as supermarket companies. He says private investors should also own some of these stocks.

"At Concise we look for companies that are in a business with high barriers to entry, that have pricing power and that are unique and cannot be easily replicated. We also want them to have solid balance sheets and sustainable earnings."

He notes that in this area of the market Australian stocks are particularly attractive, with just two or three dominant companies in many sectors.

"When you look at supermarkets, it is Woolworths and Wesfarmers [Coles] that dominate, and you have a very strong third player in Metcash. So you have high barriers to entry," King says.

"It is the same with soft-drink producers, with Coca-Cola Amatil and Cadbury Schweppes [unlisted] having a dominant position. And you are looking at two dominant beer manufacturers in Lion Nathan and Foster's. All these companies have built up a strong and sustainable earnings base through powerful market positions."

He notes that Australia does not have many big publicly listed food manufacturers apart from Goodman Fielder, although this company, too, dominates its sector, with brands that typically occupy the first or second market position in each of their respective product categories.

"We hold stocks in the consumer staples area and believe many are undervalued," King says. "We believe their market positions are sustainable and the barriers to entry are still quite significant, which means that over time they should provide good returns."

This sentiment is echoed by Ross Bird, a strategist at Aegis Equities. "I think at the moment, when we are dealing with very turbulent times, there is a tendency - and this is human nature - to seek a safe haven in defensive types of investment," he says. "Within equities, that [could] be sectors such as consumer staples, health care and even telecommunications.

"They all provide things that people require day to day. In times like the present, they are important parts of a portfolio. However, there is no free lunch in any of this. We have to be careful we are paying an appropriate price. You have got to make sure that, as good as some of the companies may be, they are not priced too high."

He recommends Woolworths, forecasting 11.4 per cent earnings growth in the year to June 2009 and 11 per cent in 2010, along with a good dividend. "They are not huge numbers but they are steady and reasonable," he says.

"We believe it is a reasonable sort of return in the present market environment. It is not just the return that is important but also the stability of the earnings - that is, the confidence one has in these returns materialising.

"In the consumer staples area, that would be our main recommendation. We are also comfortable with Wesfarmers but it would rank second behind Woolworths.

"We are reasonably positive with the health-care sector. Again, the trick is not to pay too high a price. If the stock you like has had a bit of run, you may have to bide your time and wait for a bit of a pullback. But by and large we encourage exposure to the sector. Our main recommendation is [private hospital operator] Ramsay Healthcare. It has had a bit of a rally so it is probably not as good value as a couple of months ago but we are forecasting earnings growth of 12.9 per cent next year and 9.5 per cent in 2010."

However, Steve Johnson, the managing director of the Intelligent Investor newsletter, says it is still difficult to find share price value.

"I think you can divide them into companies that have pricing power - the Woolies and the Coles of the world - and companies that do not have as much pricing power, like a Goodman Fielder," he says.

"Food prices going up has actually been a bad thing for Goodman Fielder because it has really struggled to pass on these higher costs. Whereas for Woolies it just does not make much difference, because it has such a dominant position in the market that they can pass on whatever they feel like passing on.

"However, to my mind Woolworths is nowhere near cheap enough. I think that at the right price it is a very, very safe place for your money to be but right now you are paying for a lot of future growth. It needs to grow a lot to justify the current price."

Johnson likes drugs company Sigma Pharmaceuticals at current prices.

Thomas Hodson, an equity analyst at Austock Securities, likes Retail Food Group, which manages the Donut King, BB's cafe, Michel's Patisserie and Brumby's Bakeries franchises. "The stock is cheap and if people are going to stop spending, they are less likely to stop spending on a doughnut and a coffee, as opposed to larger items in their household budget."