Analysts at Bell Potter have been busy over the holiday period finding the ASX shares that they believe are best placed to have a strong 2021. This includes picks from across a number of different industries.
Today, I am going to pick out three of the numerous ASX shares that the broker as highlighted as buys. They are as follows:
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Afterpay Ltd (ASX: APT)
Bell Potter currently has a buy rating and $140.00 price target on this payments company's shares. It believes there is a significant pipeline of catalysts that will support the company's growth in the future.
Its analysts explained: "These include further integration with other key e-commerce and payment infrastructure players in the market, further growth in customers and GMV in the US and UK as spending ramps up ahead of Christmas, a healthy Net Transaction Margin (with bad-debts remaining low) to continue into 2021 and commentary on progress made with regard to its international expansion."
Bell Potter was also pleased with ASIC's report and recent favourable commentary by the Reserve Bank on the buy now pay later sector.
Flight Centre Travel Group Ltd (ASX: FLT)
Another pick that caught my eye is this travel agent giant. Bell Potter has a buy rating and $19.00 price target on Flight Centre's shares. It is a fan of the company largely due to its increasingly important corporate business.
The broker explained: "We are most attracted to FLT's Corporate business which generated 67% of FLT's profit despite making up only 43% of the Company's TTV. The company also has a significant presence in the leisure travel market, particularly in Australia. This business – which naturally carries a high fixed cost-base due to its extensive in-store network has undergone a significant restructure since Covid-19 strangled the demand for travel – also provides a value driver which is leveraged to a rebound in international travel."
While the broker acknowledges that the short term carries a lot of uncertainty, it expects the company to eventually "restore earnings at higher margins with the removal of structural costs and market leadership from FLT's corporate business to be the key drivers of value over the long-term."
Macquarie Group Ltd (ASX: MQG)
This investment bank is the broker's favourite in the banking sector. It has a buy rating and $150.00 price target on its shares.
It commented: "Looking past the COVID-19 noise, this longer term "Cash and Growth" story remains intact. The way MQG's business model is split across annuity-style and markets-facing activities – respectively 70% and 30% of net profit contribution – strengthens resilience in withstanding market volatility and improves flexibility in being able to capitalise on higher risk-adjusted return opportunities when operating conditions normalise."
The broker also likes Macquarie due to its strong capital adequacy. This is being underpinned by its strong organic capital generation and efficient asset utilisation.
