At the start of each month analysts at Morgans reveal the shares that they rate as buys with the highest conviction.
These high conviction shares are the ones the broker believes offer the highest risk-adjusted returns over a 12-month timeframe.
Seven conviction buys from the ASX 100 this month are as follows:
Cleanaway Waste Management Ltd (ASX: CWY)
Morgans likes this waste management company due to its leadership position in an increasingly valuable sector. The broker believes Cleanaway is well-positioned to be able to deliver high single digit/lower double-digit growth in earnings per share.
Oil Search Limited (ASX: OSH)
Oil Search remains Morgans' top large cap pick in the oil and gas industry due to the strength of its earnings and the quality of its growth profile. It believes its shares are attractively price and aren't factoring in the upside potential for its PNG expansion and Alaska projects.
OZ Minerals Limited (ASX: OZL)
The broker has retained its conviction buy rating on this copper producer. It believes now is a good time to consider an investment due to recent weakness in its share price. Especially given how OZ Minerals has one of "the best outlooks in the commodities suite, driven by electrification of the developing world."
ResMed Inc. (ASX: RMD)
This sleep treatment-focused medical device company remains a favourite for Morgans. It explained: "We continue to view the company as well positioned, with solid growth expected across the core business, an "exciting" pipeline of new products and a growing digital platform via new module launches, new customer adds and price increases." It also notes ResMed's very large potential market opportunity.
Sonic Healthcare Limited (ASX: SHL)
Morgans rates this international medical diagnostics company highly due to its belief that it is "ideally positioned as a global diagnostic and pathology provider, backed by defensive earnings, growing scale and a strong balance sheet. We forecast high single digit earnings growth through 2021." It also believes the Aurora Diagnostics acquisition should support profit growth and margin expansion thanks to cross-selling opportunities.
Westpac Banking Corp (ASX: WBC)
Australia's oldest bank continues to be its top pick in the banking sector. It rates its shares as a buy due to its relatively low risk profile in relation to loan book positioning and its low reliance on treasury and markets income. In addition to this, it notes that its strong capital position and sound asset quality should support its dividend.
Woodside Petroleum Limited (ASX: WPL)
Another oil and gas company which Morgans is a fan of is Woodside due to the high quality of its earnings. Furthermore, it believes that its shares are attractively priced compared to its price target of $34.97 and its expectation of an oil market recovery. It also believes the company "will be capable of finalising the JV agreement to tie in its Browse field to the NWS and Scarborough field to Pluto LNG, de-risking growth assumptions."
