Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.
Here's why brokers think investors ought to buy them next week:
Costa Group Holdings Ltd (ASX: CGC)
According to a note out of Citi, its analysts have initiated coverage on this horticulture company's shares with a buy rating and $5.80 price target. The broker is bullish on Costa due to its exposure to lucrative produce categories such as avocados. It believes the growth of these categories will support strong earnings growth over the next few years. Citi estimates average revenue and earnings growth of 10% and 25% per annum, respectively, between FY 2018 and FY 2021. I agree with Citi and think Costa's shares would be a good investment at the current level.
Megaport Ltd (ASX: MP1)
A note out of Morgans reveals that it has retained its add rating and lifted the price target on this network as a service provider to $5.12. According to the note, the broker believes the $60 million raised via its recent capital raising will allow the company to expand its service into additional locations and markets. It expects Megaport to be active in 500 data centres by 2020, which is likely to drive strong revenue growth. Although it is a reasonably high risk option, I do think Megaport is a company with a very bright future ahead of it due to the cloud computing boom.
Super Retail Group Ltd (ASX: SUL)
Analysts at Goldman Sachs have retained their buy rating and $10.25 price target on this retail group's shares. According to the note, the broker believes that investors have overreacted to the inversion in the U.S. yield curve and isn't convinced that a U.S. recession is coming. In light of this, against the backdrop of weaker earnings and low interest rates, Goldman thinks investors should be buying shares that offer income and growth such as Super Retail. I agree with Goldman on this one and think Super Retail's shares are in the bargain bin right now.
