Investors looking for buy ideas that's off the beaten path might be keen to put these ASX stocks on their watchlist.
These often overlooked stocks are the latest "buy" recommendations outside of the S&P/ASX 200 Index (Index:^AXJO) by leading brokers.
Little risk of dividend cut
The first is the APN Convenience Retail REIT (ASX: ARQ) share price, which jumped 4.5% to $3.50 on Thursday.
Morgans reiterated its "add" recommendation on the stock after the property trust completed its $50 million placement.
APN is looking to raise another $5 million to strengthen its balance sheet and fund the recently announced acquisition of Coles Express outlets.
Management is promising that its FY21 dividend will be no less than the current financial year. That will be music to investors' ears given that the property sector is at risk of cutting dividends, as highlighted in my article yesterday.
Upcoming catalyst
"The main tenant remains Puma Energy Australia (c58% of income), however in December 2019 Chevron entered into a conditional agreement to acquire its Australian fuel business," said Morgans.
"In our view, completion of this deal would be a near term positive catalyst as it would further strengthen the credit quality of a key tenant."
The broker is forecasting a FY20 dividend of 21.8 cents a share, which increases slightly to 21.9 cents next year.
This puts the stock on a yield of 6.3% and Morgan's price target on the stock is $3.75 a share.
Digging itself out of a hole
Another ASX small cap to put on your buy list is the Imdex Limited (ASX: IMD) share price, according to UBS.
The drilling services company is impacted by the COVID-19 shutdowns, particularly in South America. You only need to look at Brazil to see what I mean.
UBS estimates that Imdex's June quarter revenue will crash by around 41% over the same period last year due to the lockdowns.
What's more, the broker doesn't see a V-shape recovery for Imdex with the way South America is going, but is convinced the stock looks cheap for those willing to look through the coronavirus crisis.
Looking cheap over medium-term
"While near-term earnings provide little support for IMD's valuation, we view IMD's FY22E EBIT multiple of 7.5x EV/EBIT as attractive and representative of more normalised EBIT," said UBS.
"We see risks skewed to the upside from a faster recovery, underpinned by a favourable commodity price backdrop, and faster adoption of IMD's new products."
UBS reiterated its "buy" recommendation on Imdex with a price target of $1.30 a share.
