Morgans says these ASX stocks can rise 20% (and pay big dividends!)

The broker believes some very big returns could be on the cards over the next 12 months.

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If you are on the lookout for the winning combination of market-beating returns and an attractive dividend yield (who isn't?), then it could be worth checking out the two ASX stocks in this article.

That's because the team at Morgans thinks so highly of these stocks that it has put them on its best ideas list this month and is tipping very big returns over the next 12 months.

Here's what you need to know about these stocks:

Cedar Woods Properties Limited (ASX: CWP)

Morgans thinks this property company is great value at current levels and sees scope for the ASX stock to re-rate to higher multiples. Particularly given that demand for its offering is improving and should result in improving margins in the near future. The broker explains:

CWP is a volume business and the demand for lots looks to be improving, with margins to invariably follow. CWP's exposure to lower priced stock in higher growth markets sees further potential to drive earnings. On this basis, we see every reason for CWP to trade at NTA and potentially at a premium, were the housing cycle to gain steam through FY25/26.

Morgans has an add rating and $5.60 price target on its shares. This implies potential upside of 20% for investors from current levels. In addition to this upside, the broker is forecasting a 4.3% dividend yield from its shares.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX stock that could be a buy according to Morgans is youth fashion retailer Universal Store. The broker likes the company due to its growth opportunities and resilient target market. It said:

Our positive view about the fundamental long-term appeal of Universal Store as a retail proposition and investment opportunity is undiminished. The growth opportunities are in place. Universal Store's women's banner Perfect Stranger is performing well, justifying an acceleration in its network expansion; the prospect of building out the wholesale distribution channels acquired with CTC is compelling; and customers continue to respond well to the Universal Store banner, rendering its plan to grow this network to more than 100 stores more than reasonable. Although its core youth customers are far from buoyant, they continue to spend.

Morgans has an add rating and $6.50 price target on its shares, which suggests potential upside of 20%. Making the deal even sweeter for investors is that the broker believes this ASX stock will provide a fully franked ~5% dividend yield.

Motley Fool contributor James Mickleboro has positions in Universal Store. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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