MENU

Leading brokers name 3 ASX shares to sell

On Tuesday I looked at three ASX shares that had been given buy ratings by brokers this week.

Unfortunately, not all shares are in favour with brokers and some have been given the dreaded sell rating.

Three that caught my eye are listed below. Here’s why they have been named as sells:

Metcash Limited (ASX: MTS)

According to a note out of Citi, its analysts have retained their sell rating and $2.55 price target on the wholesale distributor’s shares following its results release this week. Although Metcash’s shares look cheap, the broker believes that this is for a reason and fears that more customer losses could be on the horizon. Metcash recently advised that Drakes South Australia was likely to end its supply agreement next year. In addition to this, Citi doesn’t see too much merit in conducting a share buyback. I completely agree with Citi on Metcash and think investors ought to stay clear of the company’s shares.

Synlait Milk Ltd (ASX: SM1)

A note out of Credit Suisse reveals that its analysts have retained their sell rating but increased the price target on the dairy producer’s shares to NZ$7.34 (A$6.82). Last week Synlait announced that its new nutritional manufacturing site in Waikato will be commissioned for the 2019/2020 season at a cost of NZ$250 million. Although the broker thinks this is a sign that Synlait is confident that demand for its products will grow strongly in the future, it still can’t get passed its current valuation. Especially given how concentrated its customer base is. While I wouldn’t be a seller if I owned its shares, I wouldn’t be a buyer at these levels.

TPG Telecom Ltd (ASX: TPM)

Analysts at Goldman Sachs have reiterated their sell rating and $4.70 price target on TPG Telecom’s shares. According to this morning’s note, the broker believes that the challenges facing the company have intensified since it first downgraded its shares in April. Although it notes that NBN margin headwinds may lessen in FY 2019, the broker remains concerned by the competitive pressures across each of the markets and its stretched balance sheet ahead of spectrum bidding. I would agree with Goldman on this one and would suggest investors stay clear of it.

Instead of TPG Telecom I would be buying these up and comers which have been kicking goals this year.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We're living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That's why at The Motley Fool we've been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We've found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended TPG Telecom 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.