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Leading brokers name 3 ASX shares to sell

On Tuesday I took a quick look at a few shares which leading brokers had slapped buy ratings on.

Today I thought I would take a look at the unfortunate shares which brokers have given sell ratings to. Here they are:

Caltex Australia Limited (ASX: CTX)

According to a research note out of Morgan Stanley, its analysts have reiterated their underweight rating and $27 price target on the fuel retailer. Analysts at the investment bank believe that its margins have peaked now and although there is speculation unleaded fuel could soon be phased out, it doesn’t expect Caltex to see a great deal of benefit from such a move. Whilst I do like the company, if its premium fuel sales and fuel margins have now peaked, I do feel that earnings could start to slide. Caltex may be best avoided for the time being.

Link Administration Holdings Ltd (ASX: LNK)

Analysts at Credit Suisse have initiated coverage on the share registry and asset administration business with an underperform rating and a $7.70 price target. Although the investment bank believes that earnings will be boosted by its recent acquisition and margin expansion in the Australian business, it expects Link to become a slow-growth company after FY 2020. Although Link’s shares have fallen to Credit Suisse’s price target now, I wouldn’t be a buyer just yet. At 25x trailing earnings I still think they are a little on the expensive side.

Nufarm Limited (ASX: NUF)

A note out of Deutsche Bank reveals that its analysts have reiterated their sell rating on the crop protection and seed technologies company. According to the note, even after adjusting for favourable currency forecasts the bank has only raised its price target to $6.75. This is approximately 27% lower than the current share price. Whilst I would be surprised if its shares fell to that level, I would suggest investors hold off an investment and wait for a better entry point. At 17x trailing earnings its shares are certainly not expensive, but they are trading above historical levels.

Whilst the shares above may be best avoided, these growth shares certainly could be classed as buys in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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 Bruce Jackson.

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