No one will blame you if you feel there's a lack of buying opportunities among ASX shares as the S&P/ASX 200 Index (Index:^AXJO) pushes towards record highs.
But there are ASX shares that are in the "buy" zone and leading brokers have picked the latest two that's worth considering in this toppish market.
The first is the Select Harvests Limited (ASX: SHV) share price as Citigroup initiated coverage on the stock with a "buy" recommendation.
Going nuts about earnings growth
The broker believes the almond grower's profits will increase at 41% a compound annual growth rate (CAGR) from FY20 to FY23.
The big profit drivers for the Select Harvests share price are a rebound in almond prices on lower Californian supply, the acquisition of the high-yielding Piangil orchard and a normalisation of water costs.
The ASX share on a new bull cycle
"Almond prices have historically followed a 10-year cycle driven by Californian industry fundamentals," said Citi.
"While COVID-19 has disrupted this cycle, we forecast almond prices to peak at US$4.48/lb (A$13/kg) in 2024/25; almost triple current levels."
The broker's 12-month price target on Select Harvests is $6.50 a share. The Select Harvests share price jumped 1.8% to $5.61 in morning trade.
Upgraded to "buy" despite rising bond yields
Meanwhile, the Goodman Group (ASX: GMG) share price is also outperforming at the time of writing.
The industrial property group got upgraded by UBS to "buy" from "neutral" despite rising bond yields.
Property shares typically move in the opposite direction to bond yields, but the broker isn't concerned.
Multiple reasons to buy this ASX share
This is partly because Goodman Group's valuations are inherently conservative, according to UBS. This provides a substantial buffer to material interest rate movements.
Further, the group's development margins are in excess of 30% on conservative end-value yields and management can improve its portfolio through developments and divestments.
UBS also estimates that a 50-basis point increase in the discount rate (tied to bond yields) will cut the share valuation by 12%. But this can be largely offset by rent increases and inflation.
Finally, Goodman Group's strong balance sheet and ability to fund growth via equity means its reasonably insulated from the rising cost of debt.
"Given that the stock is now trading at a significant discount to our unchanged A$18.70 FY22E NAV-based price target, and given acceleration in the underlying business, we see risk-reward as skewed to the upside over our forecast horizon," added UBS.
