It can be an interesting insight to know what brokers think of a share. The problem is that a single broker can be wrong or have a bias. If you can get a consensus among brokers about which shares are best (or worst), then that may give a clue about what to buy and what to avoid.
Every so often MarketIndex collates the broker recommendations on 450 ASX shares and totals the buys, holds and sells for those shares. The higher or lower the average score the more of a strong buy, buy, hold, sell or strong sell that share is.
Here are three of the strongest sells by brokers:
Virgin Australia Holdings Ltd (ASX: VAH)
The second largest airline operator in Australia is quite unpopular amongst brokers, being the share with the second highest number of sells.
Despite the share price being down roughly 50% compared to three years ago, brokers still don’t see value. The rising oil price will be an obvious drag on performance as it will increase the key fuel cost for Virgin (and other airlines).
The company continues to make statutory losses and I can’t see this changing any time soon.
ASX Ltd (ASX: ASX)
The ASX has quite a few defensive qualities and a decent dividend yield. However, it also has the most sell recommendations from brokers.
Blockchain is an uncertainty surrounding ASX and its current valuation of just under 26x FY19’s earnings may be too high for some people, considering its slow growth rate.
I agree, I wouldn’t be buying ASX shares at this price.
Cromwell Group (ASX: CMW)
The property group has been a good performer since the GFC, however it could face tougher headwinds compared to some other property groups in the shorter-term.
Rising interest rates will not only increase the cost of its large debt pile but the value of its properties could also decline.
I wouldn’t want to be holding Cromwell shares at this point in the cycle.
I can see why brokers are not confident on any of the above shares, I personally wouldn’t want any of them in my portfolio at the current prices – although I wouldn’t want Virgin as an investment at any price.
Instead, I’d much rather hold these top shares for my portfolio instead.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of ASX 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.