The S&P/ASX 200 Index (Index:^AXJO) is clinging to its record high with a top broker upgrading these ASX shares to "buy" ahead of the August reporting season.
This shows that there's still value to be found if you cared to look even as investors are sitting on their hands.
They want to see the profit reports before deciding if our market is worthy of being pushed further into record territory.
ASX shares upgraded to buy ahead of reporting season
But UBS isn't waiting. It believes traditional ASX media shares represent good value and upgraded the Nine Entertainment Co Holdings Ltd (ASX: NEC) share price and News Corporation Class B Voting CDI (ASX: NWS) share price to "buy".
The key thing about these shares is their low probability of delivering an unpleasant earnings surprise next month.
Further, the broker reckons there is upside potential to the sector's earnings. This assumes economic growth remains favourable, notwithstanding the nearer-term headwinds from COVID-19 lockdowns.
Upside for these ASX media shares
"COVID-19's impact in the pcp will drive material y/y ad revenue growth for traditional media names in the June half," said UBS.
"Other themes include the impact of recent deals with Facebook/Google; cost control (with selected investment in growth areas); and with balance sheets broadly repaired, we see dividends returning or increasing in FY22 and the potential for corporate activity."
The broker's 12-month price target on the Nine Entertainment share price is $3.10 and the News Corporation share price is $39.50 a share.
Upgraded to "buy" on earnings cycle
Another that got upgraded by UBS is the Imdex Limited (ASX: IMD) share price. The broker lifted its rating on the drilling services small cap to "buy" from "neutral" with a price target of $2.40 a share.
"Imdex is well positioned to leverage the strong multi-year exploration cycle that is potentially emerging, supported by strength in gold and copper prices and improved access to capital," said the broker.
"IMD's Reflex units on hire are at record levels, driven by North America and Australia, where drill rig utilisation is approaching the peak."
Still cheap after 50% rally
Imdex's South American operations are lagging but at least conditions are returning to pre-COVID levels.
And don't be put off by the Imdex share price's circa 50% rally over the past year. That's broadly consistent with its global peers and the rise in gold and copper prices.
The Imdex share price is still trading at around an 11% discount to the ASX small industrials. Further, it's probably facing an upgrade cycle thanks to increasing exploration activity.
