The $50 billion market wipe-out is the buying opportunity many late-to-the-party investors have been hoping for. And top brokers have a few recommendations on the ASX stocks you should be putting on your shopping list.
The S&P/ASX 200 Index (Index:^AXJO) crashed close to 3% in the last hour of trade and every sector is wallowing in red ink.
This is how I know the market plunge is a buying opportunity as the selling is indiscriminate. Take the Graincorp Ltd (ASX: GNC) share price as an example.
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ASX stock to buy on expected upgrade
Shares in the grain handler capitulated 2.9% to $4.38 at the time of writing even though Macquarie Group Ltd (ASX: MQG) believes its cum-earnings upgrade.
The defensive stock isn't driven as much by economic cycles or COVID-19 as it is by weather. On that front, investors have reason to be excited. The Australian Bureau of Agricultural and Resource Economics (ABARES) estimated the winter 2020/21 crop was 21.5 million tonnes (mmt).
"We have been expecting a much stronger 2020/21 winter crop vs pcp of 11.4mmt given the turnaround in seasonal conditions over the past eight months," said the broker.
"Industry feedback suggests that ABARES first crop production estimate of 21.5mmt is conservative."
Raining cash
Macquarie thinks the crop could be as much as 27.3mmt and that would translate to around $50 million extra for Graincorp.
The stock is the broker's top pick for the sector and Macquarie reiterated its "outperform" rating and 12-month price target of $4.79 a share.
Competitive edge
Another stock to buy in the sell-off is the James Hardie Industries plc (ASX: JHX) share price. Shares in the building materials supplier was demolished by 3.8% to $30.12 in late trade.
But Credit Suisse reiterated its "outperform" recommendation on the stock as it's well placed to not only outpace the market but its rivals.
"JHX's internal initiatives (manufacturing, supply chain) have given the co a clear advantage, outperforming peers in the [June quarter]," said the broker.
"JHX issued FY21 guidance, unlike many building product peers, a good sign of operating performance."
Faster pace of growth
This advantage will allow James Hardie to capture market share at a time when US housing is booming, despite the pandemic.
"We believe JHX's market share growth can continue, with industry discussions suggesting JHX has been able to meet the unprecedented demand, whilst competitors have been struggling to keep up, particularly as industry inventories remain low," explained Credit Suisse.
The broker's 12-month price target on James Hardie is $34.90 a share.
