The market is off to a good start on the first day of the new financial year. This might be particularly so for a handful of ASX stocks that have been upgraded by top brokers to "buy".
The S&P/ASX 200 Index (Index:^AXJO) gained 0.6% in after lunch trade led by property and technology shares.
But there's plenty of action outside of those sectors too.
Copper turning to gold
The OZ Minerals Limited (ASX: OZL) share price is one example with the copper miner jumping 2.8% to $11.27 at the time of writing.
JP Morgan's move to upgrade OZ Minerals to "overweight" from "neutral" probably had something to do with the stock's outperformance.
The broker admitted that it was too conservative in ascribing value to the miner's Carrapateena block cave project.
But as it turns out, the capital expenditure for the project isn't as high as originally feared, while ore grades and mine life of the block cave is also better than expected.
JP Morgan's 12-month price target on OZ Minerals is $12.80 a share.
Flying high
Another stock taking off today is the Qantas Airways Limited (ASX: QAN) share price. Shares in our largest carrier jumped 3.3% to $3.90 after Macquarie Group Ltd (ASX: MQG) lifted its recommendation on Qantas to "outperform".
While predicting the earnings recovery for the airline is extremely difficult in this environment, the broker believes Qantas can sustainably achieve $1 billion in cost cuts a year by FY23. This should allow the company to fly through to the other side of the COVID-19 pandemic.
"A return to profitability is likely in FY22+, but in the near-term cash flow can still be positive considering the ~A$2bn non-cash depreciation and amortisation impact," said Macquarie.
"Using FY23 as a basis for valuation, which should be at FY19 levels… Qantas is trading on 3.1x EV / EBITDA which is a 20% discount to the 3.9x three-year average."
The broker's price target on the stock is $4.35 a share.
Tasty bite
Meanwhile, the Collins Foods Ltd (ASX: CKF) share price is on track to record it's fourth consecutive trading day of gains.
Shares in the KFC franchisee added another 0.3% to $9.45 at the time of writing, which takes its total four-day gain to just over 17%.
But Canaccord Genuity thinks there's more room for the stock to climb as it upgraded Collins Foods to "buy" from "hold" following its profit announcement this week.
The broker believes its local KFC network is well placed to benefit from the economic turmoil caused by the COVID-19 outbreak and pointed out that its underperforming European operations are performing better than it expected.
"While the earnings multiples (23x FY21e EPS) are relatively full, yesterday's result suggests that CKF remains comparatively well-placed to navigate any broader economic weakness that persists into 2021," said the broker.
Canaccord's price target on the stock is $9.75 a share.
