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Key points
- BWX and AFG are two ASX shares that are highly rated by brokers
- Australian Finance Group is one of Australia's major loan broking businesses, which is seeing significant loan volumes
- Natural beauty business BWX is rated as a strong buy by brokers, with international growth potential
Some of the ASX's best brokers have looked over the stock exchange for opportunities and have identified some ASX shares that could have significant upside.
There are always some businesses that are liked by individual analysts, but when multiple experts all like a business at the same time then it could be an indictor of compelling potential.
Here are two that are well-liked right now:
Australian Finance Group Ltd (ASX: AFG)
Australian Finance Group is one of the largest mortgage broking businesses in Australia.
AFG said that it finished the 2021 calendar year on a high with record volumes. It revealed residential lodgements were up 24% on the same period last year. It had lodged $24.6 billion for the three months to December 2021.
Residential lodgement volumes across the final three months of 2021 increased in Victoria, Queensland, South Australia and Western Australia whilst activity in NSW slowed marginally during the quarter.
One of the highlights from AFG's recent update showed that the big four banks of Westpac Banking Corp (ASX: WBC), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) have seen their combined market share drop from 57.31% to 53.55%, their second lowest market share recorded in the past 10 years. ANZ and CBA registered the biggest drops.
This ASX share is rated as a buy by at least three brokers. Morgans thinks that AFG is going to report well in February thanks to volume growth, but changing monetary policies could be a negative.
Morgans has a price target on the business of $3, suggesting upside of more than 30%.
BWX Ltd (ASX: BWX)
BWX is a leading business in the natural beauty industry with businesses like Sukin, Flora and Fauna, Mineral Fusion and Go-To.
Experts are expecting the business to report good revenue and profit growth in the February reporting season.
Citi rates it as a buy with a price target of $5.70. That's a potential upside of more than 60% over the next 12 months, if the broker is right. Over the last month, the BWX share price has fallen by more than 20% along with many of the other ASX growth shares..
The ASX share has been busy making acquisitions in the last few years to bolster its growth potential and market share.
Flora and Fauna is one of the more recent buys. It's a leading and fast-growing online retail platform. It complements its existing online platform business Nourished Life and adds scale, diversity and efficiency to BWX's online offering.
A few months ago, it bought a 50.1% stake in Go-To Skincare. It's going to expand into the North American market in 2022.
The ASX share says that natural skincare is accelerating, and BWX is building a brand-new operations and manufacturing hub in Clayton, Victoria, to meet this opportunity. Construction is nearing its final stages. This "transforms its ability to grow the business".
Citi's numbers suggest that the BWX share price is valued at 18x FY23's estimated earnings.
