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2 small caps this top broker thinks you should buy

Broker tips are a sure-fire way to find stocks to keep on your watchlist, but doing your own due diligence is a must.

Brokers from Wilsons Asset Management have hedged their bets on these two ASX small caps as buys at present.

Autosports Group Ltd (ASX: ASG)

Shares in automotive dealership company Autosports Group Ltd are up 2.1% to $1.90 at the time of writing after a volatile 12 months of share prices.

Wilsons have placed a buy rating on the company with a 12 month price target of $2.60 after the $373 million market cap company recently acquired the property of one of its Brisbane dealership locations for $11.4 million.

Wilsons said the March sales data out of Autosports was “encouraging” particularly for Audi, Volvo and BMW sales.

The broker thinks such results are a sign Autosports can achieve attractive earnings growth when compared to its peers, with a strong enough balance sheet to fund further dealership acquisitions if that’s on the cards.

Autosports is currently trading on an FY19 PER of 10.3x with 15 luxury brands in its portfolio, 34 new car dealerships, 2 used car outlets and 4 collision repair facilities.

Autosports founding management team remains in place 12 years after its inception, something the company believes gives it operational strength and an enviable corporate culture.

One to watch in the automotive industry, which appears to be netting strong sales results across the board at present, with collision repair company AMA Group Ltd (ASX: AMA) shares also up 0.5% to 95c per share at the time of writing with a broker consensus buy rating.

At the larger end of the scale shares in diversified automotive retail and logistics company Automotive Holdings Group Ltd (ASX: AHG) have slipped slightly today from its May 4 close of $3.44 to land at $3.42, with automotive revenue up 8.2% for its first-half, while operating profit before tax dropped 5.8%.

Noni B Limited (ASX: NBL)

Women’s fashion retailer Noni B Limited has caught the attention of brokers at Wilsons who have placed a buy rating on the stock, with its shares up 2.3% to $2.65 at the time of writing.

The women’s retail industry is a volatile market, but Wilsons is impressed by Noni B’s restructuring exercise to triple the size of instore accessories displays with the accessories segment forecast by the broker to report a gross profit of $14.7 million in FY19 – up $3.1 million on previous estimates.

Aggressive discounting by peers continues to be a risk factor in the segment, but Wilson’s 12 month price target is no doubt buoyed by the company’s first-half results report which saw Noni B log profit growth of 379.5% to $11.8 million.

One to watch as the company uniquely targets women in the ageing population group category and seems to have a good feel for moving on industry trends.

In the fashion accessories space Lovisa Holdings Ltd (ASX: LOV) is also one to watch.

Lovisa shares were up 2.8% to $10.46 at the time of writing after the company reported sales growth of more than 20% so far in 2018 with its global growth strategy in areas like Europe, the Middle East and US beginning to gain traction.

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

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