Morgans picks ASX stocks with upcoming “buy” catalysts

Inflation fears and other macro drivers are holding our market back from hitting fresh record highs, but Morgans thinks these …

| More on:
A drawing of a rocket follows a chart up, indicating share price lift

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Inflation fears and other macro drivers are holding our market back from hitting fresh record highs, but Morgans thinks these are just distractions and it’s identified several ASX shares with material upcoming catalysts.

You can blame worries about rising costs and comments from the US Federal Reserve for the souring mood.

Commodities tumbled overnight as investors fretted about inflation, while some Fed members hinted at winding back emergency support as the US economy picks up steam.

ASX share catalysts will beat inflation fears

The developments are likely to cause some consternation on the S&P/ASX 200 Index (Index:^AXJO) this morning. But Morgans thinks investors should use any pullback to buy a select group of ASX stocks that it believes will release positive news in the near-term.

“Adverse macro-economic forces – or at least investor fears of them – have again taken control of short-term market direction,” said Morgans.

“But as we’ve seen many times before, we think company fundamentals will again re-assert themselves as we view inflation fears as overdone.”

Buy ASX shares with potential positive updates

It’s worth remembering during these unsettling times that ASX shares have largely been issuing positive trading updates.

“The far better than feared performance of Aussie corporates through this period has meant these updates often drive share prices as much as 1H/FY results do,” added Morgans.

“We’ve also seen the market increasingly move in anticipation of them. So the ability to identify stock catalysts early has become an important tool for investors in the current climate.”

Some key ASX shares to buy now

One of these ASX shares that Morgans highlighted is the Sonic Healthcare Limited (ASX: SHL) share price.

It sees solid upside to consensus forecasts given ongoing worldwide COVID-19 testing and increases in the base testing business.

Another is the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price. Debate on Australia turning into a “hermit kingdom” is unlikely to ground the airport operator.

Monthly traffic updates show a ramp-up in domestic passenger volumes and it’s only a matter of time before international travellers return.

Meanwhile, Morgans sees big upside to the Lovisa Holdings Ltd (ASX: LOV) share price.

“Re-opening of Europe at the same time Beeline stores open (20% footprint) could provide a reasonable earnings tailwind,” explained Morgans.

“The company’s ability to contain costs could also lend upside risk. Evidence of strong trading in regions opening up post COVID.”

Motley Fool contributor Brendon Lau owns shares of Sonic Healthcare Limited. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

happy investor, share price rise, increase, up
Small Cap Shares

2 exciting small cap ASX shares to buy according to brokers

These small cap ASX shares have been named as buys by brokers...

Read more »

A white and black clock face is shown with three hands saying Time to Buy reflecting Citi's view that it's time to buy ASX 200 banks
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers are feeling positive about these ASX shares...

Read more »

A group of five people dressed in black business suits scrabble in a flurry of banknotes that are whirling around them, some in the air, others on the ground as some of them bend to pick up the money.
Technology Shares

2 ASX tech shares about to go cash-flow positive

After massive interest rate rises, using your own cash to operate is so much better than borrowing to survive.

Read more »

A woman sits on a step laughing at something on her mobile phone as it is being charged by a lithium-powered battery.
Materials Shares

Up 30% in a month, can the Pilbara Minerals share price keep rising?

Is this lithium share going to keep rising?

Read more »

Group of thoughtful business people with eyeglasses reading documents in the office.
Broker Notes

Up 12% in 30 days, is the Westpac share price still a buy?

The banking giant's shares could still offer a notable upside, according to these brokers.

Read more »

Two men cheering at laptop
Broker Notes

2 ASX shares that Morgans would buy after excellent results

Experts have dissected the reporting season and reckon this pair of stocks look great for the future.

Read more »

A white and black clock with the words Time to Buy in blue lettering representing the views of two experts who say it's time to buy these ASX shares
Broker Notes

Brokers name 3 ASX shares to buy today

Brokers are bullish on these ASX shares...

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Broker Notes

Could the ANZ share price really offer more than 20% upside?

Brokers tip the ANZ share price will regain its first-half losses and then some.

Read more »