Brokers up and down Australia have been busy once again adjusting discounted cash flow models and valuations accordingly as new data becomes available.
Three top shares that have come out of this favourably are listed below. Here’s why brokers are tipping them as buys:
Amaysim Australia Ltd (ASX: AYS)
According to a note out of Goldman Sachs, its analysts have retained their buy rating but reduced their price target on the junior telco company’s shares to $1.30. Although the broker has reduced its earnings per share forecasts for Amaysim due to a slowdown in subscriber momentum, it believes this is likely to be seasonal and that the company is holding back on potential repricing ahead of the TPG Telecom Ltd (ASX: TPM) launch. Further, despite its issues it still feels that Amaysim’s valuation is attractive at just 8x estimated FY 2019 earnings. While I agree that this is extremely cheap on paper, I am concerned that Amaysim lacks customer loyalty and could be one of the worst hit companies from the overly competitive market.
Reliance Worldwide Corporation Ltd (ASX: RWC)
A note out of the equities desk of Macquarie reveals that its analysts have resumed coverage on the plumbing parts company with an outperform rating and $6.20 price target. According to the note, Macquarie thinks the John Guest acquisition is a good one after surveying British plumbers. As a result, the broker expects the deal to be significantly accretive to earnings over the next three years. Although its shares are not cheap, I do agree that Reliance Worldwide is a great long-term investment option for investors thanks to the quality of its SharkBite products.
Treasury Wine Estates Ltd (ASX: TWE)
Analysts at Morgan Stanley have retained their overweight rating and $20.00 price target on the wine giant’s shares. The broker has held firm with its rating despite the release of a weak first-quarter result from Constellation Brands. The U.S. based rival’s result was impacted by higher commodity and transport costs. Morgan Stanley believes that Treasury Wine will be less impacted by these factors than Constellation Brands and sees value in its shares after the recent China-related sell-off. Especially given the recent depreciation in the Australian dollar. I would agree with Morgan Stanley on this one and think it could be a good long-term investment.
Here are three more buy rated shares I would be buying in FY 2019.
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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 and has recommended TPG Telecom Limited. The Motley Fool Australia has recommended Treasury Wine Estates 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.