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 …

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.

A drawing of a rocket follows a chart up, indicating share price lift

Image source: Getty Images

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.

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