There are some ASX shares that have been chosen by brokers and fundies as picks to make returns in 2021.
Brokers and fund managers work full time to try to find good stocks to pick. This article is about four of them:
BHP Group Ltd (ASX: BHP)
BHP is one of the top picks in the resources sector by James Gerrish from Market Matters. He said that the big resources ASX share is exposed to the right commodities at the right point of the cycle and looks poised to make fresh multi year highs. Market Matters has a 12-month price target on BHP of $45.
Fund manager Wilson Asset Management (WAM) said that the recent performance of the BHP share price has been driven by the iron ore price, but WAM likes BHP for its exposure to oil, nickel and copper in-particular.
WAM thinks that oil prices will be supported in the near-term by a continuing recovery in COVID-19-related demand, with travel and industrial production being two examples. BHP could benefit from higher nickel and copper demand because of the growth of electric vehicle numbers. Electric vehicle sales are expected to grow approximately 18% per annum through to 2030.
Commonwealth Bank of Australia (ASX: CBA)
The biggest ASX bank is the Australian bank choice of Mr Gerrish. He acknowledged that this isn’t an earth-shattering pick, but Mr Gerrish thought that the banks were buys when they were much lower during the COVID-19 pandemic and he thinks the bank share prices can continue to rise over the next six to twelve months at least.
Mr Gerrish reminded investors that banks borrow for a short period of time and lend for long periods of time, benefiting from a steepening yield curve at a time when loan growth is likely to surge. Market Matters is bullish on the banks and he thinks the CBA share price can go back to the mid-$90s.
Fund manager Rhett Kessler from Pengana Australian Equities Fund is also confident on the big banks, including CBA, due to reasons like rebounding home loan growth, a support federal budget, higher house prices, lowering loan deferrals and lower-than-expected loss provisioning.
Lendlease Group (ASX: LLC)
Lendlease is a pick by Mr Gerrish in the building space. He said that it’s in the sweet spot as property values rebound strongly and governments focus on infrastructure development. He said that Market Matters has a price target of $17 on Lendlease.
One of the key projects that Lendlease is working on is the San Francisco Bay area project which is a $21 billion deal with Google to develop three of the internet giant’s major districts in the San Francisco Bay area over 10 to 15 years into mixed-use communities.
The core business has a development pipeline of $113 billion, which is up 48%.
Bapcor Ltd (ASX: BAP)
Bapcor is an ASX share that is well-liked by fund manager WAM.
WAM said that the ASX share has benefited from an increase in domestic travel, reduced usage of public transport and increased second hand car sales. The fund manager also said that Bapcor has a strong balance sheet and WAM believes it’s well placed to make earnings accretive acquisitions.
Bapcor said recently that in the first five months of FY21, to November 2020, revenue was up 26% and net profit after tax (NPAT) was benefiting materially from operating leverage as well as lower expenses in categories like travel, lower interest rates. Profit is also being helped by the contribution from Truckline.
For the first half of FY21, Bapcor thinks revenue growth will be at least 25% and net profit after tax growth will be at least 50%.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.