Although investors should never rely on broker recommendations as their sole guide when it comes to making investment decisions, they can nevertheless provide a useful source of ideas for investors who are struggling to find value.
With that in mind, here are three shares that Bell Potter has recently reviewed and believes are seriously undervalued:
BT Investment Management Ltd (ASX: BTT)
Shares of the fund manager have been under pressure recently as talk of a ‘hard’ Brexit has negatively impacted the British pound and its associated impact on BT’s UK business. Despite this, Bell Potter believes the company is still well placed for growth considering it has enjoyed strong fund inflows over the past six months and is starting the new calendar year with record funds under management of $87 billion. I tend to agree with the broker, although its 12-month price target of $13.60 appears to be somewhat optimistic at this stage.
IVE Group Ltd (ASX: IGL)
IVE Group is an integrated print marketing and communications company that has recently been awarded a major contract to provide catalogues for supermarket giant Coles. While the financial details of the deal are still to be finalised, the broker believes it will have a positive impact on earnings from FY18 onwards. With that said, I expect IVE Group will deliver solid growth in FY17 following the completion of two acquisitions that are likely to generate significant earnings per share growth. Bell Potter has a 12-month price target of $3.07 which I believe is quite reasonable considering the shares currently trade on a forecast price-to-earnings ratio of just 8.4 and a dividend yield of 7.4%.
Mayne Pharma Group Ltd (ASX: MYX)
Shares of Mayne Pharma have been under serious pressure recently following news that the company is being investigated and sued for anti-competitive behaviour in the U.S. Despite this, Bell Potter believes the generic drug maker has undertaken the necessary legal actions to sufficiently protect itself from any significant loss and the key risk for investors now is the uncertainty of the situation. With that in mind, the broker has kept its 12-month price target steady at $1.83 – nearly 50% above the current share price. There is little doubt that the shares appear undervalued at current levels, but investors should expect further volatility until the company is given the all clear by regulators.
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Motley Fool contributor Christopher Georges owns shares of BT Investment Management Limited. 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.