The Christmas break may be coming, but many of Australia's top brokers have managed to squeeze in a few last minute recommendations.
Three buy recommendations that caught my eye are listed below. Here's why brokers are bullish on them:
A2 Milk Company Ltd (ASX: A2M)
According to a note out of Goldman Sachs, it has retained its buy rating and $10.28 price target on this infant formula and dairy company's shares. The note reveals that its research shows that infant formula export volumes from the New Zealand Port of Lyttelton grew strongly in November. Goldman estimates that export volumes grew 51% month on month and 227% year on year. I think this could be a sign that demand for a2 Milk Company's infant formula remains strong, making it well worth considering an investment today.
Bega Cheese Ltd (ASX: BGA)
Analysts at UBS have retained their buy rating but cut the price target on this food company's shares to $7.30 after its market update earlier this week. Due to the droughts and higher farm gate milk prices, Bega Cheese advised that normalised profit after tax is expected to be in the range of $44 million and $48 million this year. At worst this will be flat on FY 2018's result and at best it would be 9% growth. Although this was lower than what UBS was expecting, it remains positive on the company due to the fact that its shares are trading on significantly lower multiples than their average over the last five years. While I think UBS makes a fair point, I'm going to hold out until its half year results and see if management narrows its guidance range.
Caltex Australia Limited (ASX: CTX)
A note out of Citi reveals that it has retained its buy rating but cut the price target on this fuel retailer's shares to $29.58 following the release of its guidance for FY 2018. Although the guidance was slightly lower than Citi expected and it believes a gasoline oversupply could impact its margins in the first half of FY 2019, the broker sees a lot of value in its shares at current levels. I agree with Citi on Caltex and think it could be a good option for investors.
