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Top advisor names these 2 S&P/ASX 200 stocks as buys

A top advisor from wealth management group Ord Minnett has named these two S&P/ASX 200 stocks a buy to kick off the post-Easter week of trading.

Transurban Group (ASX: TCL)

Shares in toll road company Transurban Group opened 1% down today to $11.30 but the stock looks to be correcting from 4 months of slides from a December 2017 high of $12.98.

Transurban Group manages and develops urban toll road networks in Australia and the US, with 13 toll roads across Australia and 2 in Washington DC.

Ord Minnett advisor Tony Paterno has named Transurban Group a buy this week after the company reached an agreement to acquire 100% of equity interests in the A25 toll road in Montreal Canada.

The acquisition came at a price of $843 million for the 7.2km toll road with Transurban CEO Scott Charlton saying Montreal was an attractive second market for the company due to its growing population and “a government that embraces innovative transportation solutions to tackle congestion”.

Paterno said the company’s $9 billion development pipeline and management initiatives should grow toll revenues and EBITDA “at a rate of excess of local economies” in the near term, with more acquisition growth possible from a potential stake in WestConnex.

Transurban Group last month announced first half proportional EBITDA growth of 11.6%, statutory profit of $331 million and free cash flow of $582 million with a continued focus on customer experience at the forefront of its short-term strategy.

Boral Limited (ASX: BLD)

Shares in international building and construction materials company Boral Limited were down 2% to $7.29 at the time of writing.

The Boral share price has tracked upwards steadily in the last 12-months, up from $5.92 at this time last year.

Boral’s core businesses are cement and construction materials in Australia, with plasterboard products dominating its Asian market and bricks and roof tiles products sold throughout the US.

Ord Minnett’s Tony Paterno has placed a buy recommendation on the stock with expectations the company’s earnings will be driven by the success of road infrastructure spending and price increases in heavy construction materials.

Paterno said “clear signs have emerged that activity has picked up in the space” with Boral’s offshore acquisition of US firm Headwaters also expected to be integral to future growth.

Boral’s results for the half-year ending December 31, 2017 showed a strong balance sheet with growing shareholder returns, with statutory NPAT up 13% to $173 million and half-year dividend payments at 12.5c per share from 12c per share in the previous corresponding period.

The Headwaters acquisition is expected to address short-term operational issues in some businesses areas, with benefits from US corporate tax rates also coming into play.

Boral maintains its position as a key supplier to Australia’s booming infrastructure and residential construction markets, maintaining valuable quarry resource positions and strengthening margins through innovation.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Transurban Group. 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 Scott Phillips.

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