Are you looking for investment ideas? If you are, it could pay to listen to what Goldman Sachs is saying.
It has released a fresh broker note highlighting three ASX shares to buy and one to sell following post-results pullbacks.
Let's see what the broker is saying about these shares:
Life360 Inc. (ASX: 360)
Life360 could be an ASX share to buy according to Goldman Sachs. It has a buy rating and $27.00 price target on the location technology company's shares.
Goldman is bullish on its outlook and sees potential for earnings upgrades in FY 2025 due to its history of outperforming expectations.
Outside this, the broker is positive on Life360's long-term growth outlook thanks to strong subscription growth in both the US and international markets. Additionally, the company is expanding its advertising and data channels to enhance monetisation opportunities.
Goldman also highlights the potential of new hardware products, such as a pet-tracking device launching in late 2025 and an elderly-focused device, as catalysts for increased subscriptions.
Codan Ltd (ASX: CDA)
Goldman Sachs is also backing Codan, a communications technology and metal detection company. It has a buy rating and $18.50 price target on its shares.
Goldman's positive stance is based on multiple growth levers, including:
- Zetron business expansion, benefiting from US government funding for NG911 emergency communications upgrades.
- Tactical communications segment strength, supported by increased global military spending.
- Market share gains in metal detection, driven by ongoing product innovation.
- Potential for bolt-on acquisitions, which could provide additional earnings upside.
Collins Foods Ltd (ASX: CKF)
The broker is also a fan of KFC restaurant operator Collins Foods. It has a buy rating and $10.00 price target on its shares.
Goldman expects the company to deliver margin recovery, driven by easing cost pressures across its KFC operations in both Australia and Europe.
In addition, it highlights that Collins Foods is cycling a less demanding comparable period, making it easier to show year-over-year growth. So, with the ASX share currently trading at a forward price-to-earnings (PE) ratio of 17 times, which is below its historical and peer averages of 20 times, now could be a good time to pounce.
Guzman Y Gomez Ltd (ASX: GYG)
The ASX share to sell according to Goldman Sachs is Guzman Y Gomez. It has a sell rating and $33.60 price target on the Mexican fast-food operator's shares.
Despite its strong operational performance, the broker has concerns about:
- Overly ambitious long-term store expansion plans, which could pose execution risks.
- A stretched valuation, especially when compared to global fast-food peers that have seen their valuations reset.
- Upcoming share overhang risks, with major escrow releases in March (13% of shares) and August (40% of shares) potentially leading to increased selling pressure.
