Brokers say these 2 top ASX shares are buys in December 2021

Treasury Wine Estates and Adairs are both rated as buys by brokers.

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There are some top ASX shares that are rated as buys by leading brokers in December 2021.

Businesses that are liked by brokers could be opportunities for investors to consider for the longer-term with their growth plans.

One of these companies has global growth plans, whilst the other has a strong domestic outlook.

Here are two ASX shares that are rated as buys:

Treasury Wine Estates Ltd (ASX: TWE)

Treasury Wine Estates is a global wine business. It’s rated as a buy by Citi, with a price target of $13.80. If the TWE share price does get there over the next year, then it could increase by almost 20%. Citi notes the global growth moves of the Penfolds brand.

TWE says that it’s working on plans to support future growth for Penfolds in key global markets. Management said that the early momentum behind these plans is encouraging, particularly in Australia and Asian markets outside Mainland China where the Penfolds Bin revenue grew 15%.

With Penfolds, the ASX share is executing a multi-country origin strategy that will include propositions sourced from the US and France. It also said that an acquisition of additional winery and vineyards in Bordeaux that will provide incremental sourcing and production capacity for Penfolds.

Last month, TWE announced the acquisition of Frank Family Vineyards in the US for US$315 million. It’s a highly-acclaimed luxury wine business based in the Napa Valley, California with a track record of “strong revenue and EBITS growth, in addition to EBITS margins in the range of 35% to 40%.”

Management said this portfolio is highly complementary to Treasury Americas, filling a key portfolio gap for luxury chardonnay.

Based on Citi’s numbers, the TWE share price is valued at 20x FY23’s estimated earnings.

Adairs Ltd (ASX: ADH)

Adairs is a leading homewares and furnishings business. The recent acquisition of Focus on Furniture now makes it a sizeable competitor in the Australian furniture market too.

It’s currently rated as a buy by the broker UBS (among others). The price target from UBS is $5.90, so the implied upside is around 70% over the next year if the broker is right.

UBS likes all of the positives from the ASX share’s Focus acquisition and is expecting double digit growth of earnings per share (EPS) over the next few years.

Prior to the announced acquisition, Adairs said that growing store floor space through new and up-sized stores will continue to drive store sales. It’s expecting to grow its floor space by 8% in FY22 and at least 5% per annum for the following five years through those new and upsized stores.

For Adairs, the Focus acquisition gives “growth opportunities from a national store roll out, online growth and category/range expansion.”

Management thinks the ASX share can reach sales of more than $250 million over the next five years.

After the acquisition, Adairs CEO and managing director Mark Ronan said:

The Adairs Group now comprises a highly profitable and aligned portfolio of brands with significant growth potential targeting the middle market in the home category in Australia and New Zealand.

Based on the UBS estimates, the Adairs share price is valued at 8x FY23’s estimated earnings with a potential FY23 grossed-up dividend yield of 12.3%.

Should you invest $1,000 in Treasury Wine Estates right now?

Before you consider Treasury Wine Estates, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Treasury Wine Estates wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

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. owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Treasury Wine Estates Limited. 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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