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3 shares rated as strong buys by analysts

There aren’t many shares that a wide range of investors think are buys. Some investors would say one share is overvalued whilst another would describe it as a long-term growth share.

MarketIndex collates the opinions of brokers regarding 150 of the largest companies. Analysts usually review their recommendation on large companies more often than small-caps and ratings older than 60 days are ignored. A consensus is then formed when combining all the ratings about that business.

MarketIndex noted that this consensus should only be used to uncover businesses that might warrant further investigation, analysts only look at a business’ fundamentals and ignore market sentiment and momentum. Essentially, do your own research.

Based on the consensus numbers, here are three of the strongest rated shares:

Pilbara Minerals Ltd (ASX: PLS)

Pilbara had seven buy ratings and one hold rating. I’m sure most readers will be aware of the lithium boom that is already underway. Lithium batteries are a key component to electric vehicles and automated vehicles, although there are other technologies. Home batteries are also growing in popularity due to solar panels.

The fall in share price by around 30% from its all-time high represents a better buying opportunity and the long-term growth of demand for lithium is expected to keep going upwards.

It’s trading at 6x FY20’s estimated earnings.

Star Entertainment Group Ltd (ASX: SGR)

Star had nine buy ratings and two hold ratings. Star operates casinos in Sydney, Brisbane and Gold Coast. It has acquired the Sheraton Grand Mirage on the Gold Coast in a joint venture and manages the Gold Coast Convention and Exhibition Centre on behalf of the Queensland Government.

Star is one of the larger beneficiaries of the tourism inflows into Australia. Star Entertainment Group and its joint venture partners Chow Tai Fook Enterprises and Far East Consortium reached contractual close with the Queensland Government on a $3 billion redevelopment of Queen’s Wharf in Brisbane.

New hotels and developments could significantly raise earnings in future years for Star.

It’s trading at 17x FY19’s estimated earnings.

Seven Group Holdings Ltd (ASX: SVW)

Seven had six buy ratings and one hold rating. This conglomerate is a major shareholder of Seven West Media Ltd (ASX: SWM), as well as being a leading equipment hire business with Coates Hire and Westrac. Westrac, a Caterpillar dealer, hires out equipment to the resources and construction industries.

The company recently upgraded its FY18 guidance and is exposed to the growing infrastructure spend on the east coast of Australia. Plus, TV advertising revenue is projected to increase as advertisers return to traditional advertising in the near future where they can more accurately measure returns on expenditure.

It’s currently trading at 19x FY19’s estimated earnings.

Foolish takeaway

I can see why brokers are interested in all three businesses at the current prices. Currently I’d be most interested in buying shares of Star Entertainment because of the tourism tailwinds and its investments into expanding its locations.

These top ASX shares are also looking to take advantage of long-term tailwinds, they have already been big winners for shareholders.

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Motley Fool contributor Tristan Harrison 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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