Every month Brisbane-based broker and sell side research house Morgans Financials reveals to potential clients up to five of its favourite shares to buy from the S&P/ ASX100 on the basis it thinks they offer the "best risk-adjusted returns over a 12-month timeframe".
So let's take a look at what one of Australia's most popular brokers is recommending to clients this month.
Oil Search Limited (ASX: OSH) is the PNG-based LNG producer that is widely regarded as part-owing some of the world's highest quality LNG assets. According to Morgans it also has potential in "upsizing and development of its large greenfield oil project in Alaska (also high margin)." The broker also thinks the market is being too "conservative" in valuing upside from both the PNG and Alaska projects.
Potential Oil Search investors would need to have a reasonably bullish view on oil and LNG prices, otherwise it wouldn't be a great medium-term bet.
Reliance Worldwide Corp (ASX: RWC) is the innovative plumbing parts company selling its key SharkBite 'push to connect' plumbing system that connects copper and PEX piping with no soldering. Morgans and others like it due to its potential to grow SharkBite sales in the giant U.S. market in particular. The stock sells for $4.45 this morning.
Sonic Healthcare Limited (ASX: SHL) is the X-ray, diagnostic, and pathology business that Morgans sees as "backed by defensive earnings, growing scale, and a strong balance sheet". Morgans also reports its valuation (18.8x PE) and 3.7% yield are in line with historical averages.
Westpac Banking Corp (ASX: WBC) is a favourite of many dividend seekers thanks to its dominant position and huge annual profits. Morgans has also pegged it as a favourite stock to buy for a long time now thanks to its "strong capital position and sound asset quality". It also "stands to benefit most from the repricing of investor home loans" according to the analysts.
Bank shares continue to divide the bulls and bears, but for those solely focused on income and defensive plays they might not be a bad bet.
