The team at Morgans has been busy again picking out its best ASX share ideas for the month of October.
These are the shares that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.
The first two shares we looked at can be found here. Read on for the next two:
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Domino's Pizza Enterprises Ltd (ASX: DMP)
The first ASX share that Morgans rates as a strong buy this month is Domino's. It is a growing pizza chain operator with operations across the ANZ, Asian, and European markets. Morgans highlights that the company has performed positively previously when inflation was high or economic growth was slow. In addition, the broker likes Domino's due to its long term growth plans. It commented:
DMP is the largest Domino's franchisee outside the US and one of the largest quick-service restaurant companies in the world. It is an affordable option that has performed well historically even in times of inflation or slower economic growth. The engine of DMP's growth is its ability to roll out new stores all over the world. It added 438 stores to its global network in the year to June 2022, a pace of expansion that we forecast to accelerate to nearly 600 in FY23. This will take the total to almost 4,000 stores, up fourfold over a ten-year period. Over the next ten years, DMP expects to grow organically to 7,250 stores in the 13 countries in which it currently operates. This means DMP expects to more than double in size again by 2033, not including any future acquisitions.
Morgans has an add rating and $90.00 price target on the company's shares.
Telstra Corporation Ltd (ASX: TLS)
A new addition to the best ideas list this month has been Telstra. Its analysts are positive on the telco giant for a number of reasons. This includes its belief that the market is undervaluing the company on a sum of the parts basis. It also expects the Optus data leak to be a boost to Telstra's business in the next 12 months. Morgans explained:
After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote on Telstra's legal restructure, which opens the door for value to be released. TLS currently trades on ~7x EV/EBITDA. However some of TLS's high quality long life assets like InfraCo are worth substantially more, in our view. We don't think this is in the price so see it as value generating for TLS shareholders. This, free option, combined with likely reputational damage to its closest peer, following a major cybersecurity incident, means TLS looks well placed for the year ahead.
Morgans has an add rating and $4.60 price target on Telstra's shares.
