The team at Morgans regularly picks out its best ASX share ideas. These are the ASX stocks that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.
Among its best ideas for May are the two top ASX 200 stocks listed below. Here's what the broker is saying about them:
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Aristocrat Leisure Limited (ASX: ALL)
Morgans has this ASX 200 gaming technology company on its best ideas list in May. The broker believes Aristocrat is well-placed for long-term growth. It also highlights the company's strong balance sheet, which provides it with opportunities to bolster its growth organically and inorganically. It said:
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.
CSL Limited (ASX: CSL)
This biotherapeutics company is on the broker's best ideas list again in May. Morgans has labelled CSL as a key portfolio holding. This is due to its significantly improved outlook and attractive valuation. The broker explains:
A key portfolio holding and key sector pick, we believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares offering good value trading around its long-term forward multiple of ~30x.
Morgans has an add rating and $337.92 price target on the ASX 200 stock.
