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Leading brokers name 3 ASX shares to buy

Top brokers up and down Australia have been busy adjusting financial models and recommendations again.

This has led to several shares being given buy ratings. Three that caught my eye are listed below. Here’s why brokers think you should buy them:

BHP Billiton Limited (ASX: BHP)

According to a note out of the Macquarie equities desk, its analysts have retained their outperform rating and $36.20 price target on the mining giant’s shares after its board approved the development of the South Flank project in Western Australia. BHP made the move in order to replace the Yandi mine which is reaching the end of its economic life. Macquarie appears pleased that South Flank provides upwards of over two decades worth of iron ore production. I agree with Macquarie on this one and believe that BHP could be a good option for investors looking to gain exposure to the resources sector.

Decmil Group Limited (ASX: DCG)

A note out of Citi reveals that its analysts have retained their buy rating on Decmil Group but reduced the price target on its shares slightly to $1.40. The broker cut its price target after reducing its forecasts for the engineering company following its market update on Friday. Despite the reduced forecast the broker still sees a lot of upside for its shares and continues to believe it to be a share worth buying. Especially now that its market update gives it greater confidence in the company achieving the broker’s forecasts. While I’m not a huge fan of Decmil, its shares are trading at under 12x estimated FY 2019 earnings. This could make it worth taking a closer look.

Mineral Resources Limited (ASX: MIN)

Analysts at Morgan Stanley have retained their overweight rating but cut the price target on this diversified miner and mining services company’s shares slightly to $22.80 after it advised that its Wodgina direct shipping ore (DSO) operations will be brought to a premature end. Management made the decision after preliminary value analysis found that the profitability of spodumene was more than double that of DSO. As a result, management believes that continuing to sell large volumes of DSO effectively reduces the value that will be realised from the Wodgina ore body. The broker expects this to have a negative impact on earnings through to FY 2020, but still sees enough upside to maintain its buy recommendation. I think management has made the right decision and believe it will create greater value in the long-term. Like Morgan Stanley, I think Mineral Resources’ could be in the buy zone.

As well as the shares above, I think these four shares are in the buy zone right now and could be great options for FY 2019.

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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.

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