Brokers have named some ASX shares as buys.
It might be interesting to know what one particular broker thinks of a business. But when multiple brokers all think that one ASX share is a worth a buy then it could be worth paying attention to what that share idea is.
Of course, they could all be simultaneously be wrong, but it could be a good idea to have a closer look:
Pinnacle Investment Management Group Ltd (ASX: PNI)
Pinnacle is a business that invests in a number of investment managers to help them establish, grow and support a diverse stable of "world-class" investment management outfits.
It's invested in sixteen different managers including Spheria, Plato, Hyperion, Coolabah and Firetrail.
The ASX share rated as a buy by at least three brokers. One of the brokers that likes Pinnacle is Macquarie Group Ltd (ASX: MQG) – it rates it as a buy with a price target of $10.11. Performance fees are becoming a larger part of the earnings and this is helping Pinnacle is going through a strong period of performance right now.
In the FY21 half-year result, Pinnacle grew net profit after tax (NPAT) by 120% to $30.3 million. Underlying expenses were roughly flat year on year.
Aggregate affiliates' funds under management (FUM) grew 14% year on year to $70.5 billion, with retail FUM up 17% year on year to $14.3 billion.
Pinnacle wants growth to continue. The ASX share continues to invest in longer-term growth initiatives such as offshore distribution, and in servicing new, not-yet-profitable affiliates, laying the foundation for future revenue.
As a bonus for shareholders, the interim dividend was increased by 70% to 11.7 cents per share.
According to Macquarie's profit estimates for FY21, the Pinnacle share price is valued at 28x forward earnings.
Goodman Group (ASX: GMG)
Goodman is one of the largest property businesses in the world. It actually has $51.8 billion of total assets under management (AUM) – this was an increase of 5% year on year in the half-year result.
The ASX share is rated as a buy by at least six brokers. One of the brokers that likes Goodman is Citi, which has a price target of $21 for Goodman.
It owns a large portfolio of logistics and warehouse properties around the world. Goodman is a beneficiary of the trend of online shopping growth, which Citi pointed out has seen a stronger growth profile over the last 12 months.
The FY21 half-year result included operating profit growth of 16% to $614.9 million, with operating earnings per share (EPS) rising 15% to 33.1 cents. Statutory profit came in at $1.04 billion after a $1.5 billion positive revaluation across the group and partnerships with a global weighted average cap rate (WACR) of 4.7%. The distribution was 15 cents per security.
Citi did mention that rising interest rates and bond yields could be a problem, but the broker still likes it.
However, the ASX share has a very low gearing ratio of just 4.8%, with look through gearing of 16.6%. The business has net tangible assets (NTA) per security of $6.03, up 3.3% since June 2020.
Its rental portfolio continues to perform – it had an occupancy rate of 97.9% and it achieved like for like net property income growth of 3%.
Goodman has development work in progress (WIP) of $8.4 billion across 56 projects in 12 countries, with a yield on cost of 6.6%.
