The team at Bell Potter has been running the rule over a number of ASX shares and sectors and has named its top picks.
Among its picks are the three ASX 200 shares below. Here's why it thinks these are three of the best buys as we enter FY 2024:
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Brickworks Limited (ASX: BKW)
The first ASX 200 share that Bell Potter has picked out as a buy is building products and property development company Brickworks. It has a buy rating and a $27 price target on its shares. The broker commented:
Whilst the company's Building Products division faces a difficult outlook for FY24e, we are attracted to the structural post COVID-19 ecommerce/supply chain tailwinds supporting BKW's industrial property trust, where ~90% of leased asset value is located in suburbs surrounding the new Badgerys Creek airport in Western Sydney. […] In addition, Brickworks retains a further ~5,200ha operational land located on urban fringes of cities across Australia and North America, providing long-term development option value.
IDP Education Ltd (ASX: IEL)
Bell Potter remains bullish on this language testing and student placement company despite the loss of its monopoly in Canada. In fact, its analysts believe the recent pullback has created an excellent opportunity for investors to buy a market-leading company exposed to structural growth tailwinds. It has a buy rating and a $27.40 price target on its shares. The broker explains:
In our view, the recent re-rating of the stock presents an opportunity for investors to buy an established market leader in education experiencing strong structural growth tailwinds and paying a solid dividend. In addition, the business requires relatively low capital expenditure and working capital intensity and has historically maintained strong levels of cash conversion (~100% in FY22). Whilst IEL still trades at a premium to its peers on a FY24e EV/EBIT of ~24x, we believe this is justified given its market leading position, potential for M&A and successful track record.
Life360 Inc (ASX: 360)
In the tech sector, Bell Potter rates Life360 highly. It currently has a buy rating and a $9 price target on its shares. And while the broker acknowledges that recent acquisitions haven't been as successful as hoped, it remains very positive on the key core business. It said:
Life360 develops and operates a mobile app for families – called Life360 – that provides a range of safety features including communications, driving safety and location sharing. The company has also made two acquisitions – Jiobit and Tile – so that now it not only connects and protects people but also pets and things. The core business has been performing very well though the acquisitions have had a difficult 12 to 18 months due to supply chain constraints and/or a drop in consumer electronics demand. The overall outlook, however, is positive with recent price rises in the core business driving strong top line growth and the recently commenced bundling of Tile products with subscriptions to provide a further boost to subscription revenue.
