Brokers name 3 ASX shares to buy now

G8 Education Ltd (ASX:GEM), Seven Group Holdings Ltd (ASX:SVW), and Sirtex Medical Limited (ASX:SRX) have been upgraded by brokers to buys. But should you buy them?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »