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 sells by brokers:
BWP Trust (ASX: BWP)
This is a real estate investment trust (REIT) that owns a large number of properties that are leased by Wesfarmers Ltd’s (ASX: WES) Bunnings.
However, Bunnings is vacating a few of the properties and going into ex-Masters properties. BWP is finding new tenants or divesting, which is good, but this lessens the tenant profile.
Rising interest rates could also damage the value of BWP and online shopping could reduce the value of the properties.
It currently has a distribution yield of 5.4%.
Coca-Cola Amatil Ltd (ASX: CCL)
The share price is almost the same where it was a decade ago and it may not grow much over the next few years either. There is increasing movement away from sugary food and drinks as well as more competition from lower-priced competition.
If Coca-Cola Amatil can find growth in new brands then it may be able to create some fizz for shareholders, but the current anti-sugar sentiment isn’t going away any time soon.
It’s currently trading at 18x FY19’s estimated earnings.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is one of the most defensive shares on the ASX and has an illustrious history. I have written many times about its positive attributes.
However, it is now trading significantly higher compared to its historic ratios like the dividend yield. A softening housing market and falling levels of construction could hurt key holdings such as Brickworks Limited (ASX: BKW).
Whilst I am still fully behind the quality of Soul Patts, I can understand why some valuation-focused investors may want to take some profit off the table.
It’s currently trading at 20x FY20’s estimated earnings.
I agree with the calls to sell Coca-Cola Amatil and BWP Trust, I don’t think they are market-beating opportunities at the current price. However, I’d rate Soul Patts as a hold rather than a sell, despite its strong share price performance.
If I had just sold shares then I’d consider putting the money into one of these top shares which has strong growth potential thanks to ageing population tailwinds.
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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers Limited. The Motley Fool Australia has recommended Brickworks and Coca-Cola Amatil 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.