There are a few ASX shares where a number of analysts all believe that the business is good value.
Brokers are always on the lookout for opportunities. With share prices changing every day and every week, it can lead to some companies becoming opportunities as valuations change.
Whilst it’s possible that all of those analysts are wrong at the same time, it could indicate that there is an opportunity:
Australian Finance Group Ltd (ASX: AFG)
Australian Finance is one of the biggest mortgage brokers in the country.
It’s currently rated as a buy by at least three brokers, including Macquarie Group Ltd (ASX: MQG). The broker has a price target of $3.18 on the business. That suggests that the Australian Finance Group share price could rise by almost 20% over the next 12 months, if the broker is right.
Macquarie noted the recently quarterly update by the ASX share for the first three months of FY22. The broker believes that Australian Finance Group’s update showed good signs for its profit.
AFG said that mortgage brokers have lodged a record $24.1 billion in home loan finance for the first three months of the new financial year. That’s almost $6 billion more than the same period last year. It was a 33% increase year on year and a 7% increase quarter on quarter.
However, the company noted that recent moves by the regulator to rein in the property market will affect borrowing capacity for some homebuyers.
Macquarie thinks that the current Australian Finance Group share price is valued at 14x FY22’s estimated earnings with a grossed-up dividend yield of 7.5%.
Baby Bunting Group Ltd (ASX: BBN)
Baby Bunting is one of the leading retailers of baby products in Australia. It is also making moves to expand into New Zealand.
It’s currently rated as a buy by at least five brokers, including Morgan Stanley, which has a price target of $6.90 on the business. The broker noted various positives from a recent trading update.
Baby Bunting said at its annual general meeting (AGM) that in the year to date, to 3 October, comparable store sales were strengthening and were only down 1.3%. In the first seven weeks of FY22, comparative sales had been down by 6.4%.
Excluding NSW and ACT stores, comparable store sales grew by 4.7% to early October.
Online sales (including click and collect) were up 37.7% by the ASX share, which was on top of 126% growth in the prior corresponding period.
The gross profit margin increased by another 120 basis points to 38.7%.
It’s expecting to open between six to eight new stores in Australia in FY22, and two in New Zealand, towards the end of the second half of FY22.
Finally, the company said that the transformation program is “progressing well” with an anticipated launch of its new Australian website and phase two of the loyalty program in early November.
Using the projections by Morgan Stanley, the Baby Bunting share price is valued at 26x FY22’s estimated earnings. It also comes with a projected FY22 grossed-up dividend yield of 3.8%.