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Brokers name 3 ASX shares to buy now

Credit: Chris Potter

Unless you are a contrarian investor who goes against the current market sentiment, you’ll most probably want your investments to find favour with brokers.

Upgrades from brokers can be a major boost to shares, causing buying pressure which propels them to new heights. In the last week there have been a number of consensus upgrades of ASX shares which caught my eye.

According to the brokerage arm of Commonwealth Bank of Australia (ASX: CBA) the following three shares were recently upgraded and could be worth keeping a close eye on:

G8 Education Ltd (ASX: GEM)

Child care operator G8 Education was upgraded by brokers to a strong buy last week. This upgrade could be related to news that Chinese investors have been buying up childcare centres in Australia.

These investors have been paying over the odds in some cases to get their hands on centres. It is believed that they see the sector as being one which provides investors with stable returns and long-term growth.

The shares have an estimated FY 2016 fully franked dividend of 6.8% yield and are priced at just under 15 times earnings. I believe now could be a great time to invest.

Seven Group Holdings Ltd (ASX: SVW)

Shareholders of Seven Group will be pleased to learn that brokers have upgraded its shares to a moderate buy recently.

This could be especially pleasing considering the wild ride the shares have taken so far in 2016. Just under a month ago the shares had risen by 21% year-to-date, but this has been completely wiped out and they now trade down 2% for the year.

Considering the diverse investments the company makes this volatility is largely understandable. Seven Group owns 41% of media group Seven West Media Ltd (ASX: SWM) and a collection of energy and industrial investments.

Despite the upgrade to a moderate buy I would personally stay away from Seven Group. Its exposure to the energy and industrial sectors make this too volatile for my liking.

Sirtex Medical Limited (ASX: SRX)

The shares of cancer treatment business Sirtex have posted a shocking year so far. These shares are down around 28% so far in 2016, but things could be about to change following its upgrade by brokers to a strong buy.

The company may have failed to live up to market expectations with its half-year dose sales growth coming in at 15.7% year over year. But I believe this underperformance has more than been factored into the current share price.

In my opinion the current share price represents excellent value for investors and I would expect the upgrade from brokers to be the catalyst to take it higher.

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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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