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Leading brokers name 3 ASX shares to buy

Many of Australia’s leading brokers have been busy crunching numbers and adjusting their discounted cash flow models as new data becomes available.

Three top shares that have come out of this favourably with buy ratings are listed below. Here’s why brokers like them:

Graincorp Ltd (ASX: GNC)

According to a note out of Credit Suisse, it analysts have upgraded Graincorp’s shares to an outperform rating from neutral. The broker has, however, cut the price target on the grain company’s shares to $8.80. Credit Suisse appears to believe that there are several initiatives underway that have the potential to deliver stronger profits and capital utilisation in the medium-term. While I agree that its shares look good value, I would like to see an improvement in its performance as a result of these initiatives before making an investment.

Lovisa Holdings Ltd (ASX: LOV)

A note out of Citi reveals that its analysts have initiated coverage on this fast-growing retailer with a buy rating and $12.30 price target. According to the note, the broker is bullish on Lovisa’s medium term prospects thanks to its international expansion. Furthermore, the broker believes that Lovisa’s shares are trading at a meaningful premium to its retail peers. I completely agree with Citi on this one and believe Lovisa is the best option in the retail sector right now. If its U.S. expansion is a success, then I see no reason why the company could not have double the number of stores in that market than it does in Australia. At present Lovisa has 152 stores (47.5% of its network) operating in Australia.

Super Retail Group Ltd (ASX: SUL)

Analysts at Goldman Sachs have upgraded this retailer’s shares to a buy rating from neutral. Further, the broker has lifted its price target by 14% to $9.45. After working through the acquisition of Macpac and its recent trading and strategy update, Goldman has upgraded its earnings forecasts for Super Retail. In addition to this, it believes that a simplification of its retail strategy, solid valuation support, and a robust macro backdrop for the Australian consumer make it a share to buy. I agree with Goldman on this one and would suggest investors snap it up before its shares rerate higher.

As well as Lovisa and Super Retail, I think investors ought to consider snapping up these hot stocks before they take off.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Super Retail 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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