Market participants seem to put a lot of confidence into what brokers have to say about certain shares. Indeed, sometimes a single broker can put out a note and that share can move a few percentage points up or down. The MarketIndex site collates the opinion of a number of different brokers and then gives those shares an average score. Based on those opinions, here are two sells and two buys: Sells Virgin Australia Holdings Ltd (ASX: VAH) Richard Branson was once asked how to become a millionaire in the airline industry, he responded “Start as a billionaire and…
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Market participants seem to put a lot of confidence into what brokers have to say about certain shares. Indeed, sometimes a single broker can put out a note and that share can move a few percentage points up or down.
The MarketIndex site collates the opinion of a number of different brokers and then gives those shares an average score. Based on those opinions, here are two sells and two buys:
Virgin Australia Holdings Ltd (ASX: VAH)
Richard Branson was once asked how to become a millionaire in the airline industry, he responded “Start as a billionaire and buy an airline.” That joke doesn’t need to travel far to hit the company named after his Virgin empire.
Airlines are notoriously low-margin businesses that require a lot of capital. That isn’t going to change any time soon and Virgin isn’t likely to start compounding wealth strongly for shareholders.
ASX Ltd (ASX: ASX)
The company that runs the Australian stock exchange is also a sell according to the broker ratings. I think the ASX is better than Virgin, it clearly has a moat as it’s only large stock exchange in Australia. Europe and North America have several exchanges to compete with each other.
However, in recent times the ASX has come under pressure for not spotting some issues with companies and there is also a worry that companies are listing in other locations like Atlassian did. In the longer-term there also worries that changes with technology like Blockchain could harm earnings.
Bellamy’s Australia Ltd (ASX: BAL)
The organic infant formula company has really shot back into the high-performance tables. Brokers believe there is more growth to come with stock levels being rectified and Asian sales rocketing again.
The brokers may be right, but I think it’s almost impossible to say what will happen next to the infant formula industry.
Transurban Group (ASX: TCL)
The toll road company’s earnings seem to go from strength to strength. It is experiencing traffic growth across the board and it has several major projects going on in Australia. It also recently announced that it would expand into Canada.
I generally agree with the broker recommendations, Virgin is definitely a sell and Bellamy’s could be a decent buy. However, interest rates could hurt Transurban’s share price and the ASX may achieve higher earnings over time, it certainly could be a decent dividend share at this price.
I’d feel much more confident about buying these top stocks for my portfolio.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of ASX Limited. 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.