A lot of retail investors like to follow the tips of sell side research brokers in coming to investment decisions. The brokers are often quite close to a company’s management and should have a good read on its outlook.
At the same time though brokers’ ratings are not always up to date and if you follow the crowd investing it might actually become a little harder to ‘beat the market’.
Still it’s worth taking a look to see what shares analysts currently peg as ‘strong buys’ given the analysts are some of the best researchers and financial modellers around.
Accent Group Ltd (ASX: AX1) is the footwear retailer behind the HypeDC, Athlete’s Foot, Platypus and Subtype shoe stores, among others. It also has exclusive distribution rights to popular brands like Dr Martens and Caterpillar.
At $1.55 shares change hands for 15.5x trailing earnings per share (EPS) with a 5.3% trailing yield plus full franking credits. It’s forecasting more profit growth in fiscal 2020 and has a 10-year EPS compound growth rate of 14.5%. You can see why brokers like this stock.
Megaport Ltd (ASX: MP1) is another business from the stable of tech entrepreneur Bevan Slattery. Megaport sells enterprise clients the option to manage their bandwith or internet connectivity on a personalised basis. This can help its clients save time and money while helping them harness the potential of the digital economy.
For the quarter ended September 30 2019 it posted an operating cash loss of $6.54 million on sales of $11.3 million. Cash on hand is an impressive $69.3 million to mean it has room to fund its aggressive physical expansion plans.
Star Entertainment Group Ltd (ASX: SGR) is the business behind the Star Sydney and Brisbane’s Treasury Casino. It’s also investing heavily to develop its Sydney casino and in new projects on the Gold Coast. Normalised net profit fell 8.4% over fiscal 2019 to $224 million. Star has some exposure to inbound Australian tourism, but is also about to face strong new competition from Crown Resorts (ASX: CWN) in Sydney.
The casino industry has been a tough business globally for the past few years as resorts in Macau, Las Vegas and Australia all delivered weaker-than-expected results on the back of changing trends. Analysts probably like Star’s moderate valuation and reasonably reliably dividends.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Tom Richardson owns shares of Accent Group and Dicker Data Limited.
You can find Tom on Twitter @tommyr345
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Crown and MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Accent Group and MEGAPORT FPO. 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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