Top broker just slapped a “buy” on this controversial S&P/ASX 200 (Index:^AXJO) (ASX:XJO) stock

Risk appetite is returning to the market and there is a controversial underperformer that Credit Suisse believes is worthy of a “buy” in the current market.

This stock may look cheap on valuation grounds but it isn’t for the faint hearted, particularly ahead of the greatly anticipated G20 meeting where US President Donald Trump will meet his Chinese counterpart to discuss their trade war.

The S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index is up 0.6% today with the Afterpay Touch Group Ltd (ASX: APT) share price and Altium Limited (ASX: ALU) share price leading the market higher.

But the gains may be undone if Trump and Xi Jinping cannot find a way to deescalate trade tensions between the world’s two biggest economies.

Let’s not get too pessimistic though as the US Federal Reserve signalled it may not raise rates as much as the market was anticipating and the big sell-off in global equities has pushed markets back into attractive territory.

Humpty Dumpty stock

One stock that looks primed for a bounce is Link Administration Holdings Ltd (ASX: LNK), according to Credit Suisse.

The LNK share price jumped 1.8% to $7.02 after the broker upgraded the stock to “outperform” from “neutral”.

Some might call the investment platform a Humpty Dumpty stock as it’s been pulled in different directions by several forces that it’s hard for investors to piece it back together to see how it will look like over the next few years.

These forces include regulatory changes, the loss of some large contracts and the impact from acquisitions.

Piecing back the pieces

Credit Suisse has put the jigsaw together and thinks there’s good upside for investors willing to hold the stock for 2-3 years.

“Our analysis shows that M&A is the largest driver of growth for LNK (+20% to EPS by FY22E) with PEXA the most significant contributor to this growth,” said the broker.

“However, we expect organic growth to also contribute to EPS growth (+12%) driven by inflation linked pricing, industry fund member growth, a shift to higher value pension phase investors, increased outsourcing, increased regulation and complexity, expansion into new markets and increased use of employee share plans.”

Credit Suisse has a 8.30 price target on Link.

Motley Fool contributor Brendon Lau owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Altium. 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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