The team at Morgans has been busy picking out its best ASX share ideas for September.
These are the stocks that it thinks offer the highest risk-adjusted returns over a 12-month timeframe supported by a higher-than-average level of confidence.
The first two ASX 200 stocks we looked at can be found here. Read on for two more picks:
Polynovo Ltd (ASX: PNV)
Morgans has added this medical device company's shares to its best ideas list this month.
The broker likes the ASX 200 stock's NovoSorb technology. It believes it will underpin strong revenue growth in the coming years. Particularly given its potential expansion into new markets. The broker commented:
PNV's NovoSorb technology has gained rapid market traction, initially in burns and extending into trauma. Consensus has revenue growing by >20% p.a. for the next three years. Factors that will drive the revenue growth include: 1) expansion into new regions like Japan, China and Brazil; 2) a successful tender application in India; and 3) construction of its third manufacturing facility which is expected to support an additional A$500m in sales (5 times current production volumes).
Morgans currently has an add rating and $2.85 price target on its shares. Based on its latest share price of $2.54, this suggests that a return of 12% is possible over the next 12 months.
Treasury Wine Estates Ltd (ASX: TWE)
Another ASX 200 stock that gets the thumbs up from Morgans is wine giant Treasury Wine.
The broker is feeling positive about the company's premiumisation and growth strategy, which it expects to be given a big boost from the recent acquisition of DAOU Vineyards. 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.
Morgans has an add rating and $14.80 price target on its shares. Based on its current share price of $11.45, this implies potential upside of almost 30% for investors over the next 12 months.
