ASX shares have recovered from their September losses as they staged an extraordinary rally this month. It’s not too late to join the party and these three ASX stocks are the latest buy ideas from leading brokers.
The S&P/ASX 200 Index (Index:^AXJO) jumped 1.3% in after lunch trade today, taking its gain since the start of October to around 7%.
Profit miss a buying opportunity
Cashed up bargain hunters might want to put the Orica Ltd (ASX: ORI) share price on their watchlist. Goldman Sachs reiterated its “buy” recommendation on the stock even after management issued a disappointing earnings update.
The explosives maker said its FY20 earnings before interest and tax (EBIT) will be slightly above $600 million. This compares to consensus expectations of $611 million.
“While commentary was fairly limited, ORI’s update points to volumes down 15% in 2H20, at the bottom end of the company’s 10-15% guidance range on the back of developing market COVID impacts,” said the broker.
“The company also delayed FY20 reporting by two weeks to 20 Nov due to SAP integration delays (now fully live).”
But Goldman believes the worst is behind the company and that Orica will return to growth in FY21 and FY22. It also said that this is an attractive entry price to the stock and its 12-month price target on Orica is $20.30 a share.
ASX stock zooming onto the buy list
Another stock to watch is the Bapcor Ltd (ASX: BAP) share price. The stock is a favourite among brokers and Macquarie Group Ltd (ASX: MQG) repeated its “outperform” recommendation on it following management’s quarterly update.
The auto parts company reported a 27% increase in sales for the September quarter when compared to the same time last year. It is expecting a strong first half but did not provide full year guidance due to the unpredictable operating environment.
Macquarie calls the stock a “quality exposure to defensive end markets” and pointed to its attractive valuation.
The BAP share price is trading at around a 14% and 7% discount to the S&P/ASX SMALL ORDINARIES (Index: ^AXSO) on a FY21 and FY22 EV/EBIT basis, respectively.
The broker’s 12-month price target on the stock is $8.50 a share.
Underappreciated asset value
Finally, UBS restated its “buy” call on the CSR Limited (ASX: CSR) share price. This isn’t so much for the potential rebound in construction activity but for the value of its land bank.
CSR sold Horsley Park Stage 3 for $84.3 million. This land parcel is a 8.6-hectare industrial block in Western Sydney and the price was 38% higher than Stage 2.
“CSR’s large land bank in Western Sydney is leveraged to the long term thematic of rising demand for industrial land,” said UBS.
“In addition, the development of Sydney’s second airport at Badgerys Creek further adds to demand.”
While the market is waking up to the value of its land assets, the broker believes the share price is still underappreciated.
UBS’ 12-month price target on the stock is $4.77 a share.
Where to invest $1,000 right now
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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Bapcor and Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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