It's not easy finding buying opportunities when the market is trading close to its peak, but Morgans just highlighted a few ASX shares as it updated its "best ideas" list.
These are ASX shares that the broker believes are best placed to generate superior risk-adjusted returns over the next 12-months.
The new picks come at a time when the S&P/ASX 200 Index (Index:^AXJO) is within striking distance of breaking a new record high set in February last year.
Best bank for your buck
There are three ASX large cap shares that made it on Morgans' list this month. The first is the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price.
"We believe ANZ is the most compelling of the major banks on a valuation basis," said the broker.
"We expect ANZ to benefit the most of the major banks from the tailwinds currently in place for treasury and markets income."
Morgan's 12-month price target on the ANZ Bank share price is $33.50 a share.
Positive results put this ASX share on the best buy list
The second on the best buy list is the Sonic Healthcare Limited (ASX: SHL) share price. The medical testing facilities operator has been one of the COVID-19 winners thanks to mass testing.
But the momentum may not wane even as mass vaccinations are rolled out across the world.
"We see COVID-19 testing continuing into the foreseeable future, with growth potential in COVID serology testing," said Morgans.
"SHL's global base business is increasingly resilient, benefitting from geographical diversity. Strong [balance sheet] (gearing 21.6x; A$1.3bn headroom) opening the door to acquisitions, contracts and JVs."
Morgan's 12-month price target on the Sonic share price is $30.09.
Bright outlook and capital return potential
Meanwhile, the Reliance Worldwide Corporation Ltd (ASX: RWC) share price was also added for its leverage to the ongoing building and renovation boom.
"RWC continues to benefit from strong demand for DIY activity across all regions (Americas, EMEA, Asia-Pacific) which we think will at least continue in the near term," added Morgans.
"Despite higher input costs such as copper and zinc, management has indicated strong confidence in passing this through to customers via price increases."
There's also a good chance that Reliance will undertake a capital return of some sort, according to the broker. Morgan's price target on the Reliance share price is $5.50 a share.
