2 ASX shares that multiple brokers think could be buys

Both Baby Bunting and Bapcor could be opportunities according to brokers.

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A handful of ASX shares are rated by multiple brokers as buys.

If plenty of brokers think a business is worth looking at, then it might be an opportunity.

These two are potential ideas:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is the leading retailer of baby and infant items and products in Australia.

It’s currently rated as a buy by at least five brokers including Morgans, which has a target price for Baby Bunting of $6.39 over the next 12 months.

The broker has identified that there’s still a good environment for the retailing world. Baby Bunting in-particular has several growth avenues, such as the expansion into New Zealand.

Baby Bunting started shipping online orders to New Zealand in July 2020 and has completed an assessment of the NZ$450 million market opportunity in the country.

The ASX share has plans to launch a multi-channel retail proposition in New Zealand with the first store anticipated to open in FY22 as part of a network plan of at least 10 stores. This decision by management was supported by the fact there are no large format baby specialty retail chains in the market.

Morgans believes that Baby Bunting is good value because of its strong growth prospects.

In the first half of FY21, it grew total sales by 16.6%, pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) rose 29.7% and pro forma net profit after tax (NPAT) increased 43.5%. Like other multi-channel retailers, it saw online sales growth of 95.9%, making up almost 20% of total sales.

In the first half it opened three new stores, bringing the total to 59. It now has plans for over 100 stores around Australia. The company is also working on a new distribution centre which will help the logistics of future growth.

According to Morgans, Baby Bunting is valued at 28x FY21’s estimated earnings.

Bapcor Ltd (ASX: BAP)

Bapcor is the largest auto parts business in Australasia with market-leading brands like Burson and Autobarn.

It’s currently rated as a buy by at least six brokers including Morgan Stanley, which has a price target on Bapcor of $9.50.

The broker is attracted to the strong performance that Bapcor is generating with expectations of another strong result in the second half of the year thanks to the strength of the automotive market.

Bapcor’s FY21 first half result showed growth across different areas of the business. Revenue grew by 25.8%, pro-forma EBITDA went up 36.5% to $145.6 million and pro forma net profit after tax rose 54%.

The ASX share is growing profit thanks to same store sales growth, store network expansion and bolt-on acquisitions. A recent expansion has been into the trucks part space. It now has over 1,100 locations in Australia, New Zealand and Thailand.

In Thailand the business said it’s seeing its stores perform well given the circumstances. Management see potential to expand here. With a current network of six locations in Asia, it sees the scope to grow to more than 80 locations which could mean $100 million of revenue.

Bapcor also recently acquired 25% of Tye Soon, an auto parts business with operations across various countries including Malaysia, South Korea, Australia, Singapore, Thailand and so on. Tye Soon and Bapcor will work together to maximise the opportunities in both Asia and Australasia.

Morgan Stanley’s earnings forecast puts the Bapcor share price at 23x FY21’s estimated earnings.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Baby Bunting. 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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