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.
Among its best ideas for March are the three ASX shares listed below. Here's what the broker is saying about them:
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Commonwealth Bank of Australia (ASX: CBA)
Australia's largest bank is on Morgans' best ideas list again in March. This is despite the broker only having a hold rating and $96.11 price target on its shares. The broker explained:
The second largest stock on the ASX by market capitalisation. We view CBA as the highest quality bank and a core portfolio holding for the long term, but the trade-off is it is the most expensive on key valuation metrics (including the lowest dividend yield). Amongst the major banks, CBA has the highest return on equity, lowest cost of equity (reflecting asset and funding mix), and strongest technology. It is currently benefitting from the sugar hit of both the rising rate environment and relatively benign credit environment.
Endeavour Group Ltd (ASX: EDV)
A new addition to the list this month is drinks giant Endeavour. Morgans believes recent share price weakness has created a buying opportunity for investors. It has an add rating and $7.80 price target on its shares. Morgans commented:
We believe the share price weakness over the past six months on the back of an uncertain regulatory environment (eg, potential introduction of cashless gaming cards in NSW) has shifted the balance of risks to the upside with EDV's underlying business remaining strong. The company possesses a broad network of retail liquor stores/hotel venues, well-known brands (eg, Dan Murphy's and BWS) and dominant market positions.
Universal Store Holdings Ltd (ASX: UNI)
Another new addition on Morgans' best ideas list is Universal Store. The broker likes the youth fashion retailer due to its expansion potential, online opportunity, and its exposure to younger consumers. Morgans has an add rating and $7.00 price target on its shares. It said:
Universal Store (UNI) is one of the largest and fastest growing fashion retailers in Australia. Through a national network of over 100 stores and a successful online platform, UNI curates a diverse range of men's and women's fashion, shoes and accessories from local and international brands as well as its own private labels. UNI's stores trade under the Universal Store, Perfect Stranger and THRILLS banners. UNI has opportunities to grow steadily through the rollout of bricks and mortar stores, increased digital penetration and expansion of wholesale channels. While we recognise the general risk around a decline in consumer expenditure on discretionary categories like apparel, we highlight that the youth demographic is likely to be more resilient.
