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Leading brokers name 3 ASX shares to sell

With the majority of brokers taking a well-earned break over Christmas and New Year, I thought I would take a look at a few recommendations that had possibly slipped under the radar over the last week or two.

Here are three shares that were given sell ratings:

Carsales.Com Ltd (ASX: CAR)

According to a note out of UBS, its analysts have downgraded the car listings company to a sell rating from neutral. The broker has, however, raised its price target from $12.50 to $14.00, implying potential downside of approximately 4% for its shares. UBS appears to believe that the growth being priced into its shares is a little optimistic and that investors ought to consider taking profit. I would agree with UBS that Carsales looks a touch overvalued.

DuluxGroup Limited (ASX: DLX)

Analysts at Deutsche Bank have retained their sell rating and lowly $5.70 price target on the building products company’s shares following its recent update. Although the company has reiterated its guidance for profit growth in FY 2018, the broker doesn’t appear to be a fan of its current valuation. Nor am I. I think Dulux is a quality business but its shares may have got a little ahead of themselves given its vague profit outlook.

Synlait Milk Ltd (ASX: SM1)

A note out of Credit Suisse reveals that its analysts have retained their underperform rating and NZ$5.98 ($5.43) price target on the dairy processing company after it announced plans to invest NZ$125 million in an advanced liquid dairy packaging facility. The broker doesn’t appear confident that Synlait’s contract private-label processing will be able to deliver the kind of returns the company is targeting. While I wouldn’t necessarily be in a rush to sell if I owned its shares, I wouldn’t be a buyer unless its shares came back a touch.

Lastly, whilst those shares may be classed as sells, here are three shares which I think are in the buy zone today.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. 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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