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Top brokers name the latest ASX buy ideas for next week

The S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index managed to eke out gains for the week but not all investors will be happy as there’s one sector in particular that’s been cast into the sin bin.

You might think it’s tech given the big sell-off in the Afterpay Touch Group Ltd (ASX: APT) share price and the WiseTech Global Ltd (ASX: WTC) share price, but it’s the mining-heavy materials sector that is holding the wooden spoon.

The latter collapsed by nearly 3% over the week when the tech sector declined around 1%.

I bring this up because the latest “buy” recommendations by leading brokers could prompt bargain hunters to selectively buy some of these beaten down names.

Mining for value

One miner that could attract value buyers is diversified miner South32 Ltd (ASX: S32). The South32 share price is trading near the bottom of its 52-week trading range and a reasonably solid quarterly production report could support the stock nearer-term.

“S32 shares are down 30% in the last 6mths, caught up in an alumina/manganese/coal downdraft,” said Citigroup.

“Following earnings adj., our DCF valn falls to A$3.68/shr and our price target is reduced to A$3.20 from A$3.40. Met coal prices have moved off their lows and we expect global alumina curtailments at current prices.”

The broker reaffirmed its “buy” recommendation on the stock.

Starting to look shiny again

If the broker is right about the alumina market returning to balance, that will also be good news for the Alumina Limited (ASX: AWC) share price. The stock is another laggard of the sector over the past year.

Morgan Stanley has reiterated its “overweight” recommendation on Alumina with a price target of $2.80 per share following the release of its quarterly update.

“AWC’s production and costs were ~2-3% better than MSe, with distributions in-line. Alcoa expects a wider surplus in alumina,” said Morgan Stanley.

“However, AWC’s cost curve position allows a 4.2% yield at a US$280/t alumina price in CY20. Alcoa’s strategic review could also be a positive.”

But not all the “buy” calls are focused on the miners even though it had been a big week for the group as this is the time of the year they release their production updates.

Cheap insurance

One stock that has caught the attention of Credit Suisse is insurance broker Speedcast International Ltd (ASX: SDA).

The broker upgraded the stock to “outperform” from “neutral” and increased its price target to $4 from $3.85 a share following the company’s annual general meeting.

”SDF has reaffirmed their FY20F guidance for underlying EBITA [earnings before interest, tax and amortisation] of A$215mn to A$225mn, implying 11% to 16.5% growth on FY19,” said Credit Suisse.

“However, given ‘solid’ trading results in the first quarter, is now expecting to deliver towards the top end of the range.”

Not only is there upside risk to earnings, Steadfast also has around $100 million to spend on acquisitions to boost growth.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with him on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. 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.