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Top brokers list the latest buy ideas for September

This probably isn’t the best time to be buying the market as September and October have historically been weak periods for the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index.

Given how far the market has run since the start of the year, I won’t be surprised to see a bout of selling in the coming weeks.

However, this shouldn’t be enough to derail attractively priced ASX stocks with a good outlook for he year ahead. Here are three that top brokers think you should be buying today.

Steady as she goes

The first is the Steadfast Group Ltd (ASX: SDF) share price, which is trading near its 52-week high. But don’t let that fool you into thinking there’s no value left on the table as Macquarie Group Ltd (ASX: MQG) resumed coverage on the insurance broker with an “outperform” recommendation.

 The broker noted that the company delivered a FY19 top- and bottom-line result that was largely inline with Macquarie’s expectations and that the group continued to register strong organic growth with earnings before interest, tax and amortisation (EBITA) up nearly 18%.

The group also issued FY20 guidance and is forecasting EBITA to hit $215 million to $225 million (vs. $194 million in FY19) as underlying net profit hits $100 million to $110 million.

“We have increased confidence SDF will deliver growth in-line with guidance (with potential upside from acquisitions) and see opportunities to continue to add value over the medium term from network growth, new equity brokers, SCTP growth and the optionality from UnionSteadfast over time,” said Macquarie, which has a 12-month price target of $4.10 per share.

Boom coming after the bust

Meanwhile, Credit Suisse is urging investors not to give up on the Incitec Pivot Ltd (ASX: IPL) share price even after the agriculture and chemicals supplier issued a profit downgrade due to weak fertilizer prices and the impact of the drought on the industry.

But the broker thinks the outlook for Incitec’s explosives business offsets the other parts of the group exposed to agriculture and is sticking to its “outperform” recommendation with a price target of $3.73 per share.

“Strategy for the explosives businesses seems likely to centre on continuing to drive operating and capital efficiency from the current manufacturing footprint and value add driven by improvements in delivery systems,” said Credit Suisse.

“On an FY20 basis we expect IPL to generate A$400mn in EBIT and A$700mn in EBITDA from North America (Explosives and Industrial) and Australian Explosives. Sustaining and small-scale downstream capital expenditure is less than A$300mn, creating a very nice cash generating and relatively low-volatility business.”

Steel a buy

Finally, Citigroup is sticking to its “buy” call on BlueScope Steel Limited (ASX: BSL) share price following the company’s briefing to brokers.

The briefing comes at a time when the steel products maker is struggling against a disappointing outlook, domestic housing downturn and cartel charges brought on by the competition regulator.

But this is the time to buy the underperforming stock. While steel markets are on tenterhooks, cash spreads are on track to meet management guidance.

Citigroup also thinks the capital intensity relating to the expansion of the group’s US North Star business isn’t as bad as many believe if the phase 2 expansion is included in the calculations.

Conditions in BlueScope’s New Zealand and Australian businesses are also expected to improve in the near-term and management intends to defend itself against the ACCC’s civil case.

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Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited and Macquarie Group Limited. Connect with him on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Steadfast Group Ltd. 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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