Every month, the team at Morgans 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. The broker also notes that they are supported by a higher-than-average level of confidence.
Among its best ideas for December are the two ASX 200 shares listed below. Here's what the broker is saying about them:
CSL Limited (ASX: CSL)
This biotechnology company remains one of Morgans' best ideas in December.
With the ASX 200 share trading at a significant discount to long-term multiples, it feels now is a good time to invest. Particularly given its positive outlook. The broker explains:
While shares have struggled of late, we continue to view CSL as a key portfolio holding and sector pick, 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 trading at 25x, a substantial discount (20%) to its long-term average.
Morgans has an add rating and a $328.20 price target on the company's shares. This implies a potential upside of 23% for investors.
Treasury Wine Estates Ltd (ASX: TWE)
Another ASX 200 share that Morgans has on its best ideas list in December is wine giant Treasury Wine.
Its analysts believe that the company's shares are undervalued at current levels. Especially given its recent acquisition, which is expected to support higher margins in the future. The broker also sees the removal of Chinese tariffs as a potential positive. It explains:
It may take some time for the market to digest TWE's acquisition of Paso Robles luxury wine business, DAOU Vineyards (DAOU) for US$900m (A$1.4bn) given it required a large capital raising. The acquisition is in line with TWE's premiumisation and growth strategy and will strengthen a key gap in Treasury Americas (TA) portfolio. Importantly, DAOU has generated solid earnings growth and is a high margin business. It consequently allowed TWE to upgrade its margins targets. While not without risk given the size of this transaction, if TWE delivers on its investment case, there is material upside to our valuation. The key near term share price catalyst is if China removes the tariffs on Australian wine imports.
Morgans has an add rating and a $14.15 price target on Treasury Wine's shares. This suggests an upside of 37% is possible over the next 12 months.
