2 ASX shares rated as strong buys by analysts

Bapcor is one of the ASX shares that several brokers like.

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There are thousands of different ASX shares to choose when it comes to investing in stocks.

But only a certain number of them may be good value to consider today. Share prices are changing all the time and this can alter whether they are good value or not.

If a price looks attractive, then analysts may call it a buy. If many different analysts all believe that a business is a buy then that could mean it's an opportunity.

With that in mind, here are two ASX shares that are rated as buys:

A compass with the word opportunities is shown in black and blue representing a broker upgrade on the EML share price

Image source: Getty Images

Bapcor Ltd (ASX: BAP)

Bapcor is one of the largest auto parts businesses in Australia, New Zealand and the Asia Pacific region.

It operates a number of different brands including the trade business Burson, the retail business Autobarn, multiple specialist wholesale businesses such as Truckline and other auto-related businesses like Midas.

Bapcor recently expanded into Asia with its acquisition of a large minority stake of Tye Soon – an Asian auto parts business – and a small network of Bursons in Thailand.

At the moment, Bapcor is rated as a buy by at least seven brokers, including Morgan Stanley with a price target of $9.70. That suggests a potential upside of close to 20% over the next year. The broker thinks that Bapcor can meet its guidance that it has set.

Bapcor recently gave a trading update that said it had made a 'solid' start to FY22, with flat revenue. Management said this demonstrated the resilience and non-discretionary nature of Bapcor's businesses in the face of lockdowns in Sydney, Melbourne, Canberra and New Zealand.

The ASX share is aiming to at least meet the pro forma profit of FY21 in FY22. Whilst lockdowns have had an impact on the first half, no more lockdowns are expected, with a stronger second half expected.

Management point to a number of tailwinds. There are more cars on the road, the average age of vehicles continues to rise (needing more maintenance), there has been a move away from public transport and more people are spending their holidays domestically.

Morgan Stanley thinks that the Bapcor share price is valued at 21x FY22's estimated earnings.

New Hope Corporation Limited (ASX: NHC)

New Hope is one of the largest coal miners in Australia.

It's currently rated as a buy by at least four different brokers, including Credit Suisse. The broker has a price target of $2.80 on the business – that suggests a potential upside of close to 40% over the next 12 months, if the analysts are right.

Credit Suisse points to a useful environment for the coal price and demand. There may not be a large increase of supply because of the increasingly negative reputation that coal has as an energy source, with growth of fighting against climate change.

The broker thinks that New Hope is valued at just 2x FY22's earnings and 3x FY23's earnings. Based on the dividend projections, Credit Suisse's numbers suggest a potential grossed-up dividend yield of 17% in FY22 and 8.2% in FY23.

New Hope recently released its FY21 result which showed a net profit of $79 million and an annual dividend per share of 11 cents. That translates into a trailing grossed-up dividend yield of 7.8%.

The business is expecting that sustained cost management across the business will bring a continuation of improved results that it saw in the second half of FY21.

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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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