The team at Morgans has been busy picking out its best ASX share ideas for February.
These are the shares that its analysts think 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)
Morgans has this pizza chain operator on its best ideas list again this month. Its analysts continue to believe that investors should be taking advantage of the share price weakness that has been caused by headwinds that will soon reverse. It explained:
DMP is, in our opinion, a high quality operator with significant brand strength, first class executive management and a global platform for long-term network expansion. Cost inflation and adverse FX movements present significant challenges to earnings at present, as evidenced by EBIT margins, which fell from 13.4% in FY21 to 11.5% in FY22. SSS sales, which averaged +6.9% in the ten years between FY11 and FY21, dropped to (0.3)% in FY22 and (1.0)% in FY23 YTD. We believe these pressures are transitory in nature. In our opinion, now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time. The recent equity raise will fund DMP's acquisition of the remaining stake in its German joint venture and keep gearing low enough to allow for future M&A optionality.
The broker has an add rating and $90.00 price target on Domino's shares.
Lovisa Holdings Ltd (ASX: LOV)
Another ASX share that Morgans has on its best ideas list is growing fashion jewellery retailer Lovisa. Morgans thinks very highly of the company and believes it could one day become a global force thanks to its ambitious leadership team and global expansion plans. It said:
LOV may just prove to be one of the biggest success stories in Australian retail. With ambitious and well-incentivised new leadership in place, we think now is the time LOV steps up to become a global force. LOV has accelerated its organic rollout in the US and entered into a number of new markets, including Poland, Canada, Mexico and Hong Kong. It is also poised to enter the important market of Italy. Investment will be needed to expand LOV's network in the US and Europe and to take it into new markets, but the returns could be stellar. We think LOV's products fill an underserved niche, offering fast fashion jewellery at prices that are attainable to the target demographic
Morgans has an add rating and $28.50 price target on Lovisa's shares.
