3 ASX shares the brokers think you should buy

In recent days brokers across Australia have once again been busy upgrading and downgrading a number of shares on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

Three shares in particular that brokers have upgraded to consensus strong buy ratings according to CommSec are as follows:

Pacific Energy Limited (ASX: PEA)

Pacific Energy is a Perth-based renewable power company. Following a formal tender process it recently won a new 8-year power generation contract extension with leading gold miner St Barbara Ltd (ASX: SBM). With this key contract signed and sealed, the company is now able to look ahead to the future. Management has advised that it will now be investing in its Kalgoorlie Power Systems in order to deliver efficiency gains and lower fuel consumption costs. I believe this is great news and at less than 15x estimated FY 2017 earnings it certainly looks to be good value in comparison to industry peers DUET Group (ASX: DUE) and APA Group (ASX: APA).

SEEK Limited (ASX: SEK)

It doesn’t come as great surprise to see this outstanding company rated as a strong buy. SEEK has been dominating the Australian job listing market for some time now and doesn’t look likely to cede its position any time soon. With the company going after market dominance in numerous territories across the world, I believe this is one share you could buy and hold for the next decade at least. Its majority-owned China-based business Zhaopin is another key draw to SEEK in my opinion. I have been very impressed with its growth in the China market and believe it has an incredibly bright future ahead of it.

Super Retail Group Ltd (ASX: SUL)

This is one recommendation I’m not entirely convinced with. Admittedly at 14x estimated FY 2017 earnings it is relatively cheap compared to its retail peers, but personally I feel the market is being overly optimistic on its growth prospects. French sports store behemoth Decathlon has arrived in Australia and could be a major blow to the growth prospects of its Rebel Sport and Amart Sports brands. Decathlon launched an online store in Australia earlier this year and is planning on opening 35 of its warehouse-style stores over the next 10 years according to reports in the Australian Financial Review. Currently Super Retail’s sports segment contributes 37% of total sales, so a slowdown in the segment is likely to make a noticeable impact on the company’s overall performance.

Lastly, these three blue chips could be even better additions to your portfolio if you ask me. Solid growing dividends and potential share price gains make them a buy 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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