Animal spirits are alive and kicking on the market with experts predicting more gains for the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index for the next few months at least.
The top 200 benchmark is rallying 0.8% to a new record high as we head into the close thanks to the latest positive Chinese export data, an impending US and China trade deal next week and receding risk of war in the Middle East.
There are also expectations that the upcoming US and Australian reporting season will hold more positive than negative news.
But it’s times like this when everyone thinks the market is going one way that makes me worry. Perhaps I am just getting old and grumpy. For those with a more optimistic bent on markets, here are the latest three stocks that scored a “buy” from top brokers.
Time for a toast
Those worried that the latest US wine data from Nielsen spells bad news for the Treasury Wine Estates Ltd (ASX: TWE) share price should think again, according to UBS.
The Nielsen figures imply further weakness for Treasury Wine’s US business but the broker is not fussed as it believes the survey covers only 40% to 50% of the ASX company’s business in that market.
Further, any softening in wine sales is already in the share price with UBS reiterating its “buy” recommendation and $20.50 12-month share price target on the stock.
“We believe the outlook for TWE is positive, with potential upside into FY22+ via new capacity, M&A and the French expansion,” said the broker.
“Trading at 21x 1yr fwd PE with a 3-yr EPS CAGR of ~15%, making TWE one of the best valued premium alcohol companies globally.”
Battered but not defeated
Talk about controversial calls! Credit Suisse reckons that embattled AMP Limited (ASX: AMP) is worthy of an “outperform” (or buy) rating despite its many challenges stemming from the Hayne Royal Commission.
Clients may be pulling their money out of the wealth manager to the benefit of other platform providers like Netwealth Group Ltd (ASX: NWL) and Hub24 Ltd (ASX: HUB), but falling interest rates could tip the scale.
This is because Netwealth and Hub24 have greater exposure to the cash administration fee (the fee they collect from clients who park capital in cash). As rates fall, the interest they earn is lower than the admin fee, thus clients will lose money by holding cash through the platforms unless the providers lower their fee.
AMP is far less exposed to this issue and its low valuation (thanks to its share price crash), means the stock is a better buy in Credit Suisse’s eye.
Meanwhile, investors looking to benefit from a break in the drought (a question of “when” as opposed to “if”) will want to start positioning themselves in Elders Ltd (ASX: ELD), according to Bell Potter.
The ELD share price surged over 8% to $6.80 today after the broker reiterated its “buy” call on the stock with a 12-month price target of $8.15 a share.
“The fundamentals behind the cattle market as we enter 2020 are virtually identical to that of 2015,” said Bell Potter.
“When rain returns, we expect a material uplift in cattle prices as restockers compete with processors for limited supply.
“While price ultimately gives way to volume in a restocking event, our analysis of the 2014-16 cycle demonstrated that the value of cattle turned off recorded a ~65% uplift in a two year window, despite a volumes falling ~20% over the same period.”
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Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Elders Limited and Hub24 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.