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Top brokers name 3 ASX shares to buy next week

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:

Carsales.Com Ltd (ASX: CAR)

According to a note out of Credit Suisse, its analysts have retained their outperform rating and $15.00 price target on this auto listings company’s shares following its update last week. Credit Suisse was pleased to see Carsales provide earnings guidance in line with expectations, though notes that revenue is slightly lower than it forecast. Its analysts suspect that this could mean it is still being impacted by difficult trading conditions in the advertising market. However, it saw enough in the update to remain positive on the investment opportunity. Whilst there are shares at this side of the market that I would choose ahead of Carsales, I do agree that it could be a decent option for investors at the current price.

Challenger Ltd (ASX: CGF)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating but trimmed the price target on this annuities company’s shares to $8.80 following its update last week. According to the note, the broker was disappointed to see the company lower its targets and growth assumptions, but believes that it was a necessary move. It is optimistic that this is the end of the rebasing process and sees a lot of value in its shares at the current level. Macquarie notes that Challenger’s shares are now trading at a material discount to their five-year average price to earnings ratio. Whilst Challenger looks very cheap at this level, I’m staying clear of its shares until trading conditions improve.

Stockland Corporation Ltd (ASX: SGP)

Analysts at Goldman Sachs have retained their buy rating and $4.72 price target on this property developer’s shares following its investor day in Melbourne last week. According to the note, the broker was pleased to see the company maintain its FY 2019 guidance for 5% growth in funds from operations. In addition to this, the broker believes that management is being conservative with its FY 2020 guidance and remains comfortable with its own expectations being met by Stockland. Based on Goldman’s forecasts, Stockland’s shares will provide a 6.4% dividend yield in FY 2020. In light of this and the low interest rate environment, I agree with the broker and feel Stockland could be worth considering.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended carsales.com Limited. 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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