The team at Morgans has been busy picking out its best ASX 200 share ideas for October.
The first two ASX 200 shares we looked at can be found here. Read on for two more of the broker's picks:
Aristocrat Leisure Limited (ASX: ALL)
There are three key reasons why Morgans has this tech share on its best ideas list again this month. This includes the gaming technology company's strong long-term growth outlook. The broker explains:
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 a $46 price target on its shares.
Qantas Airways Limited (ASX: QAN)
The team at Morgans appears to believe that recent weakness has created a buying opportunity with this ASX 200 airline share. The broker highlights the discount that Qantas' shares trade at compared to pre-COVID levels despite being structurally more profitable. It said:
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). The strong pent-up demand to travel post-COVID should result in a healthy demand environment for some time, underpinning further earnings growth over FY24/25. QAN's balance sheet strength positions it extremely well for its upcoming EBIT-accretive fleet reinvestment and further capital management initiatives (recently announced another A$500m on-market share buyback at its FY23 result).
Morgans has an add rating and $8.60 price target on Qantas' shares.