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.
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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That's a 12% to 14% improvement over last year and is ahead of its previously withdrawn guidance for 9% to 11% increase!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.
