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Top broker names 8 “high conviction” shares to buy now

Analysts at sell-side broker Morgans have been looking to drum up some business by running the numbers on ASX shares under their coverage to come up with a list of eight shares it thinks you should buy now.

Morgans defines its top picks for October as “those that we think offer the highest risk-adjusted returns over a 12-month timeframe, supported by a higher-than-average level of confidence”.

Let’s take a look at the shares they came up with this month:

Oil Search Limited (ASX: OSH) shares sell for $7.10 and the broker believes the LNG producer is “ideally positioned for near term upside”. Oil Search is generally regarded as one of the two best pure energy producer plays on the ASX alongside Woodside Petroleum Limited (ASX: WPL).

ResMed Inc. (CHESS) (ASX: RMD) stock sells for $9.80 and Morgans likes it due to the medical device maker’s new product releases, SaaS business, and exposure to a stronger U.S. dollar. I’d agree with the broker on this one and think ResMed looks an excellent long-term growth stock.

Westpac Banking Corp (ASX: WBC) is liked due to its consistent dividend outlook and opportunity to lift margins on investor home loans. As a defensively minded income-seeker it’s hard to go past the big yields offered by Australia’s dominant banks, when at the right valuation.

Bapcor Ltd (ASX: BAP) is the auto parts distributor that Morgans likes, inter alia, due to its strong track record and acquisitive growth options. I agree with Morgans on this one and think the business looks a good opportunity for growth investors prepared to take on a little extra risk.

Nextdc Ltd (ASX: NXT) is the data centre business liked due to its strong outlook as corporate demand for data centre services is certain to grow over the years ahead. NextDC looks a good business, but shares are expensive at $4.77.

MotorCycle Holdings Ltd (ASX: MTO) is using Morgans as its lead manager and underwriter for a capital raising and is understandably “liked” by the broker. Today the stock sells for $4.57.

Aventus Retail Property Fund (ASX: AVN) is a real estate investment manager rated for its 7% yield and “organic growth pipeline”. Shares reportedly trade at a 4% premium to its net tangible asset value, which suggests it’s roughly in line with fair value.

PWR Holdings Ltd (ASX: PWH) is another widely-liked small-cap company that manufactures cooling systems for high-performance automobiles. Morgans likes the business due to its growth potential and with this hot stock shedding 26% over the past year now may be a good time to take a closer look.

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Motley Fool contributor Tom Richardson owns shares of Bapcor and ResMed Inc.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of Bapcor. 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.