The ASX is suffering a big sell-off but this is the time investors should be hunting for buying opportunities.
The S&P/ASX 200 Index (Index:^AXJO) is likely to close near or at its intraday low with the benchmark tumbling over 2% to 5,844 in late afternoon trade.
The rising risk of a second COVID-19 wave in the US and Victoria roiled investors and is prompting many to ask if this is the start of a painful market correction.
Don't let this pullback go to waste. I do not believe we will retest the bear market lows in March and even stocks that are not directly in the path of a second wave are getting tossed out with the bathwater.
Coincidently, leading brokers have reiterated their buy recommendation on some of these ASX shares.
Defensive buy
One of these is the Sonic Healthcare Limited (ASX: SHL) share price as Goldman Sachs restated its "buy" recommendation and described it as the "preferred name in the sector".
The medical testing services group issued a better than expected trading update yesterday, which will likely see a 7% to 9% increase in its FY20 consensus earnings forecasts.
"Overall, new guidance is only 4-5% below pre-Covid-19 targets, which, if achieved, would be viewed as a significant achievement in such a challenging period," said the broker.
Riding on a second wave
What's even more exciting is management's belief that its business in most of the regions it operates will start FY21 at around pre-coronavirus levels.
Sonic also undertakes COVID-19 testing and a second wave isn't necessarily bad news for the group.
Goldman Sachs' 12-month price target on Sonic is $34.50 a share.
Double-digit profit growth
Another stock with relatively safe earnings and that's recommended by Macquarie Group Ltd (ASX: MQG) is AUB Group Ltd (ASX: AUB).
The insurance broker withdrew its earnings guidance at the peak of the pandemic but just recently issued a fresh update.
The new forecast is for adjusted net profit to range between $52 million and $53 million for the current financial year.
Earnings upgrade despite the coronavirus
That's a 12% to 14% improvement over last year and is ahead of its previously withdrawn guidance for 9% to 11% increase!
"At a sector level, competitors have also recently noted increased rates, stable operating trends, cost out and M&A potential," said Macquarie.
The broker's 12-month price target on AUB is $15.11 a share.
