It’s the start of another month. Brokers have picked out a couple of ASX shares that could be really good opportunities to think about in June 2021.
But it’s not just one broker that likes the below businesses. There are actually a number of analysts that like the below ideas:
Australian Finance Group Ltd (ASX: AFG)
There are currently at least three brokers that like this large mortgage broking business. One of those brokers that like Australian Finance Group is Macquarie which has a price target of $3.06, which gives it a potential upside of almost 10% over the next 12 months.
Macquarie pointed out that the ASX share’s net interest margin (NIM) is doing well thanks to the lower funding costs.
In the third quarter of FY21, the business’ brokers lodged a record $20.6 billion in home loan applications. That was a 3.79% increase on the prior quarter and a 34.32% increase year on year.
Australian Finance Group said that record low interest rates, effective government stimulus packages and an improving consumer outlook have contributed to increased activity.
Quarter on quarter, NSW lodgements were up 9.37% and Victorian lodgements were up 6.6%.
Rising house prices have contributed to a fall in the loan to value (LVR) ratio. The national average LVR is down from 73.3% to 71.9%. The national average mortgage size has increased by 5.9% to $574,948.
Australian Finance Group disclosed that first home buyer activity has slowed, down from 22% to 18%, but this figure is still historically high. The ASX share commented that the state and federal government incentive schemes have done their job and likely pulled forward some demand.
Using Macquarie estimates, the Australian Finance Group is valued at 15x FY21’s estimated earnings with a grossed-up dividend yield of 6.3%.
Ramelius Resources Limited (ASX: RMS)
Ramelius Resources is one of the gold miners on the ASX, with its operations in Western Australian. It operates the Mt Magnet, Vivien, Edna May and Marda gold mines. It also has the Tampia and Penny gold projects.
It’s currently rated as a buy by at least three brokers, including Morgan Stanley which has a price target of $2.30 on the business.
The broker thinks that the gold miner can continue to generate good cashflow to pay dividends, fund growth and perhaps even find some acquisitions.
In its quarterly update for the period to 31 March 2021, it saw group gold production of 66,029 ounces, which was within its production guidance of 65,000 ounces to 70,000 ounces.
The gold miner’s all-in sustaining cost (ASIC) was AU$1,370 per ounce, though this was at the top of the guidance.
For the quarter, Ramelius said it generated A$38.7 million of underlying cash flow, after excluding the FY20 tax payment and Tampia farm and minority joint venture acquisitions.
For FY21, it’s expecting to produce between 275,000 ounces to 280,000 ounces at an ASIC of between A$1,280 to A$1,330 per ounce.
According to Morgan Stanley, the gold miner is valued at 15x FY22’s estimated earnings with a projected grossed-up FY22 dividend yield of 4.7%.