As we pass the 2-year anniversary of COVID-19 arriving in Australia, the share market is on tenterhooks as much as when the pandemic started.
Perhaps it's time for a drink?
Each month Morgans reveals its "best ideas" — a list of ASX shares to buy that the team thinks has the greatest chance of high returns over the next 12 months.
Among the February honour roll are 2 ASX shares that keep the beverages flowing for Australians.
Cheers!
Making up for lost ground
Treasury Wine Estates Ltd (ASX: TWE) took a brutal hit in 2020 when its lucrative Chinese market disappeared overnight after a diplomatic feud between Canberra and Beijing.
Morgans analyst Andrew Tang estimates it will take 2 to 3 years to recover the Chinese revenue in other markets.
"However, once it comps China earnings, we expect Treasury Wine Estates to deliver strong earnings growth from the 2H22 onwards."
In addition to organic growth, acquisitions could also prove fruitful.
"We view Treasury's recent acquisition of the Napa Valley luxury wine business, Frank Family Vineyards, as strategically important," said Tang.
"This high margin business should see Treasury achieve its US margin target 2 years earlier than planned."
The great news for those considering buying Treasury shares is that the stock price has taken a 13.6% haircut so far this year.
"We see recent share price weakness as a great buying opportunity in this high quality company. The stock is currently trading at a material discount to its long term PE range."
Treasury Wine Estates shares closed Wednesday at $10.80.
Will Australians return to pubs as we 'live with the virus'?
Endeavour Group Ltd (ASX: EDV) listed last June as a spin-off from former parent Woolworths Group Ltd (ASX: WOW).
The group operates recognisable alcohol retail brands like Dan Murphy's and BWS, as well as licenced venues.
The retail arm has gone gangbusters over the past couple of years as Australians stayed home and drank.
Conversely, Endeavour's pubs and hotels have suffered from lockdowns and restrictions keeping patronage low.
As Australia moves to "living with the virus" mode, the Morgans team reckons it can only improve the company's prospects.
"The reopening of venues in NSW and VIC should be positive for Endeavour overall, despite likely weakness in retail as at-home consumption normalises, given hotels is a higher margin business."
Like Treasury, Endeavour shares are going for a tidy discount at the moment. The stock price has lost almost 6% this year, and more than 10% since November.
Endeavour shares closed Wednesday at $6.36.
