It's a welcome change to see every sector on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index finish in the black on Monday as bargain hunters reappeared following the brutal sell-off late last week.
This may be fueling debate about whether our market is again getting overstretched but investors can take comfort that the end of bull markets are not caused by valuations but by external macro-economic factors.
The problem is that it's near-impossible to read the tea leaves in this volatile geo-political environment and that means it pays to be particularly discerning in selecting stocks to buy at this market juncture.
On that note, there are two ASX stocks that might be worth paying attention to as they are the latest buy picks by leading brokers.
One to bank on
Shares in Australia and New Zealand Banking Group (ASX: ANZ) is under the spotlight after Bell Potter upgraded the big bank to "buy" from "hold" ahead of its full year results on 31 October.
The underperformance of the ANZ Bank share price and better confidence around the resilience of its net interest margin (NIM) has convinced the broker to put the stock back on the "buy" list.
This doesn't mean the bank's NIM won't fall further though. In fact, ANZ Bank's NIM is expected to slip 4 basis points to 1.75% in FY19 compared to the previous year, and it will keep falling to 1.73% by FY21.
But that won't be enough to derail its dividend of $1.60 per share. At the end of the day, the sustainability of its dividend is arguably the single most important factor for the stock, which is trading on a generous yield of around 8.4% once franking is included.
Bell Potter has a 12-month price target of $29.30 per share.
Market shortage to boost CSL
Another stock worth buying in this market is the CSL Limited (ASX: CSL) share price. Never mind that the stock has already rallied around 30% this calendar year.
Credit Suisse sees more upside for the market darling as it thinks CSL is the best positioned in the short-term to benefit from a tight immunoglobulin (IG) market.
This means CSL can again deliver double-digit gains in IG sales even after it delivered a 16% increase in FY19.
"Assuming no increase in litres collected per centre, we estimate the industry footprint needs to expand by 80-90 centres p.a. in 2020-25 to meet demand," said Credit Suisse.
"In our view, the current industry structure where the US market is a core supplier of plasma globally
is unsustainable, as collection centre openings and donors are not keeping up with long-term global demand growth."
Credit Suisse reiterated its "outperform" recommendation on the stock with a price target of $249 per share.
