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 bias. If you can get a consensus among brokers about which shares are best, then that may give an (obvious) clue about what to buy and what to avoid.
Every so often MarketIndex collates the broker recommendations of 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 shares rated as strong buys by brokers:
Afterpay Touch Group Ltd (ASX: APT)
The buy now, pay later provider has been a strong performer with the share price up more than 250% over the past year.
By traditional metrics Afterpay looks expensive compared to FY18’s earnings or even FY19’s estimated earnings. However, it is just entering the US market and now has plans for the UK market. If it’s as successful in those countries as it has been in Australia then it could achieve a lot of growth.
Whilst it’s not my type of investment, Afterpay could be a good market-beater over five or more years. However, the next 12 months could be very volatile.
Bingo Industries Ltd (ASX: BIN)
The waste collection business has also had a solid year, with the share price up 46%.
Revenue and profit were both up more than 40% for Bingo in FY18. Yet in FY19 the underlying business, excluding acquisitions, is predicting earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 15% to 20%. Including acquisitions it could be even better.
The valuation is not as attractive as it was pre-reporting season, but it could keep compounding profit at pleasing rates for the next few years.
Seven Group Holdings Ltd (ASX: SVW)
This is the holding company of several assets including a significant shareholding of Seven West Media Ltd (ASX: SWM). It has also been a strong performer, it’s up 86% in the past 12 months.
This is the one I’m least confident about. Whilst TV companies and construction are both on a good run, it could quite easily halt or even go backwards.
At the current prices I wouldn’t personally call any of them a strong buy. Bingo and Afterpay could be solid market beaters over three or more years, but the current valuations don’t leave too much margin for error over the next 12 months.
I’d much rather buy shares of one of these top shares which is at an attractive level and has exciting long-term growth potential.
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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 AFTERPAY T FPO. 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.