The team at Morgans regularly picks out its best ASX share ideas. These are the ASX shares that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe supported by a higher-than-average level of confidence.
On the list at the moment are the two ASX 100 shares listed below. Here's why the broker believes these are among the best shares to buy right now:
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Aristocrat Leisure Limited (ASX: ALL)
The first ASX 100 share that Morgans is tipping as a best buy is gaming technology company Aristocrat Leisure.
The broker likes the company due to its strong balance sheet, leadership position, and real money gaming opportunity. It explained:
ALL is a global market leader in the rapidly-growing land-based gaming and mobile gaming industries. It has delivered revenue growth of 17% pa over the past five years and 80% of revenue in FY21 was recurring. We expect ALL to continue to take market share in all its product segments. Demand for its gaming machines and digital games is resilient to economic cycles, though has slowed in recent months, leading the share price down. ALL's 1-year forward P/E has derated to less than 20x from a high of 30x last September. With $3.3bn of currently available liquidity, ALL has significant funding capacity for growth, even after the buyback. It has a stated ambition to build a meaningful presence in the rapidly-growing online real money gaming segment, which we believe may be achieved both through organic investment and inorganic acquisitions.
Morgans has an add rating and $43.00 price target on Aristocrat's shares.
Westpac Banking Corp (ASX: WBC)
Another ASX 100 share making the list is Australia's oldest bank, Westpac.
The broker rates this banking giant highly due to its return on equity potential. It also sees Westpac as a top option for income investors due to its fully franked dividend yield. Its analysts said:
We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.
Morgans has an add rating and $25.80 price target on Westpac's shares. It also expects a fully franked 6%+ dividend yield in FY 2023.
