The month of April certainly has been a busy one filled with countless quarterlies, trading updates, and business developments.
Unsurprisingly this has meant that Australia’s leading brokers have been kept especially busy adjusting discounted cash flow models and recommendations.
Three that have fared well and been given buy ratings are listed below. Here’s why brokers think they are in the buy zone:
Cleanaway Waste Management Ltd (ASX: CWY)
According to a note out of UBS, it has retained its buy rating and lifted the price target on the waste management company’s shares to $1.90. The broker has made the move after the ACCC advised that it would not oppose the proposed acquisition of Tox Free Solutions Limited (ASX: TOX). UBS likes Cleanaway due to the momentum of its core business and the diversity that Tox Free would bring it. With the broker forecasting earnings growth of 13% per annum over the next three years post-acquisition, UBS sees value in Cleanaway’s shares at 20x estimated FY 2019 earnings. While I do agree with UBS, my preference in the industry remains Bingo Industries Ltd (ASX: BIN).
OceanaGold Corp (ASX: OGC)
A note out of Citi reveals that its analysts have retained their high risk buy rating and $4.70 price target following the release of the gold miner’s latest quarterly update. Although OceanaGold saw production fall 15% during the latest quarter, a decline was widely expected by the broker. As such, it has held firm with its rating and believes the gold miner’s shares are trading at a significant discount to its peers. I’m not a big fan of the gold miners right now with rising rates in the United States, but investors that do want exposure to gold could do a lot worse than OceanaGold.
QBE Insurance Group Ltd (ASX: QBE)
Analysts from the Macquarie equities desk have retained their outperform rating and increased the price target on the insurance giant’s shares to $11.00 after looking into the company’s expenses. According to the note, the broker believes that a lack of scale in Europe and the US means QBE has higher underwriting expense ratios than its peers. As such, the broker thinks management might consider divesting assets to redeploy capital and achieve greater scale in these two markets. While I think Macquarie could be spot on here, QBE has consistently disappointed over the last few years and I’m not convinced it will be any different over the next few years.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.