The team at Morgans has been busy running the rule over a number of S&P/ASX 200 Index (ASX: XJO) shares again this month.
Among its best ideas for December are the two ASX 200 shares listed below. Here's what the broker is saying about them:
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Aristocrat Leisure Limited (ASX: ALL)
Morgans has this gaming technology company on its best ideas list again this month.
Its analysts highlight that the company is well-placed for growth thanks to its ability to invest in design and development and its expansion in real money gaming (RMG).
It commented:
We have three key reasons for being positive on ALL. They are: (1) long-term organic growth potential. ALL is better capitalised than many of its competitors and has what we regard as a strong platform to continue investment in design and development in both its land-based gaming and digital businesses; (2) strong cash conversion and ROCE. ALL is a capital-light business despite its ongoing investment in Gaming Operations capex and working capital. It has a high level of cash conversion and ROCE and (3) strong platform for investment. ALL has funding capacity for organic and inorganic investment in online RMG, even after the recent buyback. Its current available liquidity is $3.8bn.
Morgans has an add rating and $43.00 price target on the company's shares.
Xero Limited (ASX: XRO)
A new addition to the best ideas list this month is Xero. The broker believes the cloud accounting platform provider's shares are trading at a very attractive level. In fact, they are trading at a level that values the company less than the lifetime subscription value of its subscribers. It commented:
XRO is a high quality cash generative business with impressive customer advocacy and duration. Over the last 12 months rising interest rates and competition have made things harder for Xero. However, we see the current short-term weakness as a rare opportunity to buy a high quality global growth company at a discount to the life time value of its current customer base.
Morgans currently has an add rating and $77.00 price target on Xero's shares.
