Our market is on track to finish the week up 5% as bargain hunters flood back into the market after the recent panic sell-off.
It's not too late to pick up an oversold stock or two as the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) remains in correction territory with a loss of around 12% since hitting a peak in April. A loss of between 10% and 20% is defined as a technical correction.
Looking for a bargain? The latest round of profit reports has thrown up two stocks that are worth considering, particularly since the stocks have been upgraded to a "buy" equivalent rating by brokers on the back of their results.
The first is global hospital operator Ramsay Health Care Limited (ASX: RHC) with at least two brokers upping their recommendation on the stock after management posted a big profit result yesterday.
Macquarie noted that Ramsay's UK operations are growing at the same pace as Australia with revenues in the country increasing 8% as patient volumes from the UK's public health system grow 11% to make up three quarters of all admissions.
What's more impressive is that Ramsay still managed to deliver margin growth even though patients on the public system pay less.
Ramsay's Australian operations are also pleasing with growth here underpinned by the company's brownfield expansion.
The company has managed to lift domestic margins too with ongoing staffing and procurement efficiencies.
Credit Suisse is another who is impressed by the margin expansion. While Ramsay's French operations were the only dark spot in the results due to price reductions and poor organic growth prospects, the broker thinks the company can offset this through cost savings from procurements.
"Indeed, the reduction in medical consumables/supplies as a percentage of revenue by ~130 basis points demonstrates the material cost differential between France and Australia," wrote Credit Suisse in its latest note.
Both brokers have upped their recommendation to "outperform" from "neutral", with Macquarie lifting its price target on the stock to $75 from $70, and Credit Suisse increasing its target to $72.15 from $70.75 a share.
The other stock to put on your radar is fund manager Perpetual Limited (ASX: PPT) with UBS tipping that now is the right time to back the underperformer after it posted a full-year underlying net profit of $130.5 million that was slightly ahead of its forecast.
But that's not the reason why the broker upgraded its recommendation to "buy" from "neutral". Perpetual has shifted its strategic focus to growing its top-line from cost cutting.
While the strategy to chase growth carries bigger risks, UBS thinks there are reasons to be optimistic about the strategy.
Net fund flows have turned positive in the Perpetual Investments division while recent client wins in Perpetual Private are generating more meaningful funds under advice (FUA) growth.
After under-performing its wealth management peers by around 15% over the past three months, UBS believes there's meaningful upside to the stock if Perpetual can deliver on organic growth in 2015-16.
CLSA echoed a similar view as it upgraded the stock to "buy" and is forecasting double-digit earnings growth for Perpetual from "steadily increasing inflows and continued strong investment performance over the medium term".
UBS has a price target of $50 while CLSA has a target of $51.11 on the stock.
