The Motley Fool

3 ASX shares rated as strong buys by brokers

The three ASX 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 Commonwealth Bank of Australia (ASX: CBA) and another says that Transurban Group (ASX: TCL) 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.

With that in mind, here are three ASX shares that brokers like:

Magellan Financial Group Ltd (ASX: MFG)

Magellan is a fund manager that specialises in investing in international shares. At least eight brokers think it’s a buy at moment.

One of the reasons that it’s attractive is its grossed-up dividend yield of 7.2%. There may be further growth of earnings and dividends to come with the fund manager recently announcing that the average funds under management (FUM) for the December 2018 half-year was $72 billion compared to $53.55 billion a year ago.

The continuing strong performance of the investment team at Magellan is generating pleasing outperformance fees as well, as an added bonus.

Bapcor Ltd (ASX: BAP)

Bapcor is the leading auto parts business in Australasia. There are currently at least five brokers that rate Bapcor as a buy.

Bapcor is currently one of my favourite mid-cap shares. It share price has fallen 15% over the past six months, despite guiding for more profit growth in FY19.

I’m attracted to Bapcor’s defensive earnings, its steady organic growth and the large potential of Burson Australia. It’s also trading cheaply at 19x FY18’s earnings.

Cleanaway Waste Management Ltd (ASX: CWY)

Cleanaway is one of Australia’s largest waste management businesses. There are at least six brokers who think Cleanaway is a buy at the moment.

We all generate waste week after week in our homes and businesses, so Cleanaway’s earnings are rather defensive. It is expected to grow profit over time with a growing population, more contract wins and perhaps rising profit margins.

Foolish takeaway

All three businesses have a good chance of beating the market over the next few years. Both Bapcor and Magellan trade quite cheaply for their potential growth rates.

Cleanaway could also be a good one, but local governments may not be pleased to pay increasingly higher prices if Cleanaway’s profit margin keeps rising.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off it's high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


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