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 February are the two ASX 200 shares listed below. Here's what the broker is saying about them:
Aristocrat Leisure Limited (ASX: ALL)
This gaming technology is an ASX 200 share to buy this month according to Morgans. Its analysts are positive on Aristocrat due to its organic growth potential, solid cash conversion, and strong balance sheet. The latter provides the company with the ability to invest in growth opportunities. The broker explained:
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 Aristocrat's shares.
Qantas Airways Limited (ASX: QAN)
Morgans has added this ASX 200 airline share to its best ideas list in February. In fact, the broker has elevated Qantas to the position of its top travel stock pick under coverage. This is thanks to its near-term earnings momentum and attractive valuation. It commented:
QAN is now our preferred pick out of our travel stocks under coverage given it has the most near-term earnings momentum. Looking across travel companies globally, airlines are now in the sweet spot given demand is massively exceeding supply. QAN is trading at a material discount compared to pre-COVID multiples, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings).
Morgans has an add rating and $8.50 price target on Qantas' shares.
