As the market inches closer to resetting its record high, brokers still see value among select ASX shares and have just upgraded these two to "buy".
The S&P/ASX 200 Index (Index:^AXJO) added 0.7% this morning to 7,070 points. It's within striking distance to the 7,139 peak that it set in February last year before COVID-19 triggered a market meltdown.
Fuelled-up for a broker upgrade
While ASX value buys are harder to find these days, the Ampol Ltd (ASX: ALD) share price could be one of the exceptions.
This is despite the fact that the Ampol share price is adding another 1.2% to a four-month high of $27.85 at the time of writing. The morning's gain in on top of the circa 6% surge it enjoyed yesterday after it got a big government handout to keep its Lytton refinery operating.
Strategic value unlocks "buy" upgrade for this ASX share
Morgan Stanley upgraded the Ampol share price to "overweight" from "equal-weight" after the government announced a package to protect Australia's fuel security.
"The newly announced refinery support package reduces the earnings volatility for the company at a time when global refinery margins are starting to increase," said the broker.
"We think the business is well positioned for an earnings recovery as driving volumes continue to increase and jet fuel demand gradually increases as domestic air travel rebounds."
Morgan Stanley increased its 12-month price target on the Ampol share price to $31.70 from $30 a share.
Increasing production to meet strong demand
Another that is outperforming the market today is the Pilbara Minerals Ltd (ASX: PLS) share price.
Canaccord Genuity upgraded the Plibara share price to "buy" from "hold", which coincided with the ASX share jumping 3.7% to $1.12 at the time of writing.
The broker's bullish turn comes as it accesses the impact of the commissioning of the Ngungaju plant and the ramp up in full production from 2022.
Powering up
Pilbara is a lithium miner and processor. The production increase comes at a time when investors are feeling very bullish about the outlook for batteries.
"Given strong demand, we think this may result in further price pressure, as converters who are short feedstock bid prices up," said Canaccord.
"PLS is investigating a move down the value chain by producing a midstream lithium sulphate product. This may deliver greater margins and reduce the overall hard rock supply."
Canaccord's 12-month price target on the Pilbara share price increased to $1.45 from $1.15 a share.
