It has been a subdued year for the Transurban Group (ASX: TCL) share price.
The toll road operator's shares are currently fetching $13.81, which means they are up just 1.5% in 2021.
What now for the Transurban share price?
While the underperformance of the Transurban share price this year has been disappointing for shareholders, it could prove to be a buying opportunity for non-shareholders.
In fact, the team at Morgans believe the company's shares are attractively priced enough to be included in the broker's best ideas list for December.
According to the note, the broker has an add rating and $14.79 price target on the company's shares.
Based on the current Transurban share price, this implies potential upside of 7.1% over the next 12 months.
On top of that, Morgans believes that Transurban's dividend is poised to rebound quickly after being cut during the pandemic. The broker is forecasting a ~7% increase in FY 2022 to 39 cents per share and then a further 46% increase to 57 cents per share in FY 2023.
Based on the current Transurban share price, this implies yields of 2.8% and 4.1%, respectively.
Why does Morgans like Transurban?
Morgans likes Transurban for a number of reasons. This includes its exposure to regional population and employment growth and urbanisation, its market cap weighting, the quality of its assets, and its growth prospects.
The broker explained: "Given very high EBITDA margins, earnings are driven by traffic growth (with recovery from COVID) and toll escalation (roughly half at CPI and the remainder fixed c.4% pa)."
"We think TCL will continue to be attractive to investors given its market cap weighting (important for passive index tracking flows), the high quality of its assets, management team, balance sheet, and growth prospects. Watch for rapid recovery in DPS alongside traffic recovery and WestConnex acquisition prospects," it concluded.
