The market surged higher on Monday on optimism that we’ve seen the worst of the COVID-19 pandemic.
This optimism pushed the S&P/ASX 200 Index (Index:^AXJO) up 4.3% to a three week high. We shouldn’t forget we are still in a bear market, but if you haven’t been putting at least some of your capital back to work, you should.
Where you can find value
The stock benchmark is now 16% above the trough of March 24 and the good news is that there are still bargains to be found.
In fact, leading brokers have only just upgraded these ASX shares to buy as they have good potential to generate at least a 20% total return.
Shopping for bargain buys
You might think only the foolhardy would venture into the listed shopping centre space, but this sector is ripe for the picking, according to JP Morgan.
The broker upgraded a number of stocks in the real estate sector as it believes these stocks are better placed in the coronavirus pandemic than during the GFC.
Most have lower gearing and higher levels of cash reserves. This won’t stem a wave of asset write-downs as our economy down shifts by several gears due to rising unemployment, but there’s opportunity for the brave.
One stock in particular stands out for its potential upside. This is the shopping centre trust Vicinity Centres (ASX:VCX). JP Morgan upgraded the stock to overweight from neutral as it sees a 33% upside to its price target of $1.50 a share.
Bring on the bling
Gold is proving itself to be a safe haven during global coronavirus crisis and a number of ASX gold producers have outperformed.
But it isn’t too late to strike gold in this sector. Goldman Sachs believes there are couple of nuggets investors could dig out.
“We think the Australian gold sector is well positioned to capitalise on healthy margins, strong balance sheets, and a favourable outlook,” said the broker.
“The sector is trading at 0.8x NAV [net asset value], vs. ~1.1x at the start of the year.
“Gearing is low, and on average, the sector is net cash.”
On that bullish note, Goldman Sachs upgraded Resolute Mining Limited (ASX RSG) to “buy” from “neutral”. The stock will need to climb over 40% to reach the broker’s price target of $1.20 a share.
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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. 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.