Last week was a busy one filled with countless broker note releases following a large number of half year releases.
Three buy ratings that caught my eye are summarised below. Here's why brokers think investors ought to buy them next week:
South32 Ltd (ASX: S32)
According to a note out of Citi, its analysts have retained their buy rating and lifted the price target on this mining giant's shares by ~2% to $4.40 following its strong first half result. For the six months ended December 31, South32 posted revenue of US$3,811 million and profit after tax of US$635 million. This was a 9% and 17% increase, respectively, on the prior corresponding period and ahead of Citi's forecasts. The broker has previously suggested that South32 could be worth considering due to its strong free cash flow generation which it believes could lead to further capital management initiatives. I agree with this view and think it is a great option for investors seeking exposure to the resources sector.
Super Retail Group Ltd (ASX: SUL)
A note out of Goldman Sachs reveals that its analysts have retained their buy rating and lifted the price target on this retail group's shares to $10.25 following its half year results. Goldman uses a sum of the parts valuation for Super Retail and believes the market is undervaluing its businesses. Furthermore, the broker notes that its generous fully franked 6.5% dividend yield is supported by a ~12% free cash flow yield. In light of this, the broker thinks it would be a good option for investors despite the soft Australian consumer spending environment. I agree with Goldman on Super Retail and feel its shares offer a compelling risk/reward.
Treasury Wine Estates Ltd (ASX: TWE)
Analysts at Credit Suisse have upgraded this wine company's shares to an outperform rating from neutral and lifted the price target on them by ~20% to $19.85 following its half year results. According to the note, the broker appeared to be a touch disappointed with its free cash flow during the half. However, it is willing to overlook this due to its strong growth prospects in the China market. I think Credit Suisse is spot on here and feel it could be a great buy and hold option.
