ASX investors will have an opportunity to regain some of the lost ground from the 2020 financial year with leading brokers naming the latest ASX stocks to buy.
The market is likely to remain volatile and unpredictable as we enter FY21 but there are a number of stocks that look well placed to outperform, according to brokers.
Steel prices to strengthen
The coronavirus-induced economic shutdown is hurting the steel industry, but there’s precisely why the broker likes BlueScope, which owns North Star in the US.
“Production in the Great Lakes region of the US has stepped down meaningfully (from ~700ktpw to ~400ktpw), which should aid North Star’s position,” said the broker.
“A gradual restart could present some risks to price progression, but on the whole, we expect steel prices to trend higher from here.”
The broker is also expecting more Australian government stimulus for the housing market, which will support BlueScope’s local operations.
Macquarie’s 12-month price target on BlueScope is $12.20 a share.
Another stock that might be worth considering is the Jumbo Interactive Ltd (ASX: JIN) share price after its big two-day slump.
Investors took a dim view of its renegotiated lottery reseller deal with Tabcorp Holdings Limited (ASX: TAH), but Morgans isn’t put off.
In fact, the broker upgraded the stock to “add” from “hold” with a 12-month price target of $11.58 a share.
“We believe the extension of the agreement with TAH is positive for JIN and provides the group with certainty as a reseller of national games and allows it to focus on growing the Powered By Jumbo (SaaS) business,” said Morgans.
Meanwhile, COVID-19 hit Growthpoint Properties Australia Ltd (ASX: GOZ) might be another to add to your shopping list.
Credit Suisse restated its “outperform” call on the industrial and office landlord as it hasn’t been materially hit by the pandemic.
Rent collection in April, May and June have been relatively high and the group is anticipating collections to increase for May and June as rent relief negotiations are finalised.
“While total billings do not include rent waived for small and medium enterprise (SME) tenants, GOZ indicated the total amount of rent waived over the 3-month period is less than A$1mn,” said the broker.
“Despite a challenging (and uncertain) economic climate, we see a degree of defensiveness over GOZ’s earnings.”
Growthpoint is trading at a more than 11% discount to its net tangible asset (NTA) value and is sitting on a dividend yield of around 7%.
Credit Suisse’s price target on the stock is $3.34 a share.
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Brendon Lau owns shares of BlueScope Steel Limited and Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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