2 top ASX shares recommended by brokers

The two shares I’m going to mention in this article are rated as ‘buys’ by several brokers.

It’s quite hard to find businesses that are both good businesses and trading at a good price. Even then, one person might say Caltex Australia Limited (ASX: CTX) and another says that National Australia Bank Ltd (ASX: NAB) is a better choice.

Investment site MarketIndex regularly collates the ratings of brokers together to assess what the broker community collectively think are opportunities. Of course, this still isn’t a guarantee of success – they could all be herding together.

However, I think the following two shares, which are rated by brokers as buys, could be good buys today:

Bapcor Ltd (ASX: BAP)

Bapcor is Australia and New Zealand’s leading auto parts business with its chains of Bursons and Autobarns.

Whilst demand for new cars can fluctuate year to year, demand for spare parts is usually consistent. In-fact, in weaker times there could be more demand for car parts as people try to make their current car last longer instead of buying a new one.

Bapcor is increasing profitability through acquisitions, economies of scale and higher rates of private-brand sales. If the company’s expansion into Asia goes well that could unlock a huge growth avenue.

However, many detractors of Bapcor point out that the rise of electric cars and automated cars could have a negative impact over the long-term. However, electric cars are only a small portion of new car sales at present in Australia. Plus, Bapcor has its own chain of specialist electrical suppliers.

It’s currently trading at 22x FY18’s continuing earnings.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is one of Australia’s leading fund managers, with Hamish Douglass leading its investment team.

It has done a great job of growing funds under management (FUM) through consistent outperformance of its international benchmark. Strong performance is good at attracting new funds, but it also translates to pleasing growth of the current FUM.

With a new generous dividend policy and Mr Douglass now focusing more of his efforts on the investing side of Magellan, there could be more impressive total returns to come.

Foolish takeaway

Over the medium-term I expect both businesses will be market-beaters. Bapcor has an impressive store-roll out agenda whilst the Magellan investment team’s track record should keep attracting more FUM.

Another share getting a lot of attention at the moment is this ASX tech share that’s revolutionising the retail sector.

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Motley Fool contributor Tristan Harrison owns shares of Bapcor. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia owns shares of National Australia Bank 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.

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