Brokers up and down Australia have been busy once again crunching numbers and adjusting valuations. A number of shares have come out of this favourably and been given buy ratings.
Three which caught my eye are listed below. Here’s why brokers think they are in the buy zone:
James Hardie Industries plc (ASX: JHX)
According to a note out of Goldman Sachs, the broker has retained its buy rating and $26.08 price target on the building supplies company ahead of its results next week. Goldman expects James Hardie to deliver fourth-quarter net profit after tax of US$73. million, up 34.1% on the prior corresponding period. This will lead to full-year profit (pre-asbestos) of US$278.2 million, up 11.9% on FY 2017 and slightly ahead of guidance. I’m not a huge fan of James Hardie Industries at the current price, but it could be worth a closer look if it outperforms expectations.
Nextdc Ltd (ASX: NXT)
A note out of UBS reveals that its analysts have retained their buy rating on the data centre operator and increased the price target on its shares from $7.70 to $9.05. According to the note, UBS believes that the company’s recent capital raising to fund its future expansion will lead to strong earnings growth over the next decade. Especially given how the cloud computing market continues to accelerate, leading to rising demand for data centre services. I agree with UBS on this one and think NEXTDC could be a good investment option for patient investors with a long-term view. It does, however, trade on a sky-high valuation right now. As such, failure to live up to the market’s lofty expectations could lead to its shares tumbling lower.
Rio Tinto Limited (ASX: RIO)
Analysts on the Macquarie equities desk have retained their outperform rating and $93.00 price target on this mining giant’s shares. According to the note, the broker believes that the $5 billion war chest the company has from recent divestments could be used to make material acquisitions that fuel future growth. In addition to this, the broker feels that its shares are still great value despite rallying hard this year. I would have to agree with Macquarie on Rio Tinto. With the global economy growing strongly, I think the miner is well-positioned to grow earnings and its dividend at a strong rate.
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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. 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.