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Morgans names 6 “high conviction” shares to buy this February

Stockbroker and research house Morgans is warming up for reporting season by naming six of its favourite ASX shares for investors to buy now and preferably use its broking desk in so doing. Cynicism aside, it’s worth looking at what shares some of the market’s leading brokers believe offer the best risk-adjusted returns over the next 12 months as they do have wide networks and expertise.

So let’s take a look at the companies on Morgans’ “high conviction” list this February.

Oil Search Limited (ASX: OSH) is the PNG-based LNG producer often cited as a top buy by broking houses thanks to the long life of its high-quality PNG assets and apparently strong growth profile. Of course if you zoom out a little Oil Search remains at the mercy of global energy prices, which means its success is far from guaranteed. The shares are up 3.4% over the past year.

Cleanaway Waste Management (ASX: CWY) is liked as Morgans expects “relatively defensive” and “solid earnings growth” thanks to increasing demand for waste management services. The balance sheet has also improved according to Morgans, with the shares up 23% in the last year.

OZ Minerals Limited (ASX: OZL) is a South Australian copper miner liked because of its “robust cashflows” and “counter-cyclical growth strategy” as new projects come online. The copper price is often described as a proxy for global growth due to its multiple industrial uses and OZ Minerals is of course vulnerable to swings in copper prices.

ResMed Inc. (ASX: RMD) is a sleep treatment healthcare leader Morgans likes after big share price falls on the back of its latest quarterly results. It has a “very large potential market opportunity” and jut delivered a sixth straight quarter of “double-digit operating income growth”. ResMed has stretched its balance sheet a fair bit recently, but remains one of the ASX’s best companies.

Reliance Worldwide Corp (ASX: RWC) is the plumbing business with an innovative “push-to-connect” fitting product that has driven its long-term growth. Morgans believes recent share price falls offer a “strong value proposition” and global opportunity.

Westpac Banking Corp (ASX: WBC) shareholders will be feeling chipper today with the share price up 7.7% to $26.77 and Morgans believes it will be a big beneficiary of the re-pricing of “investor home loans”. For conservatively minded income seekers it’s correct that you could do a lot worse than Westpac shares.

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Motley Fool contributor Tom Richardson owns shares of ResMed Inc.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has recommended ResMed Inc. 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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