Brokers have collectively rated the two ASX shares in this article as buys. One of those picks is Pinnacle Investment Management Group (ASX:PNI).
The post 2 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia. –
Brokers have named some ASX shares as buys.
It might be interesting to know what one particular broker thinks of a business. But when multiple brokers all think that one ASX share is a worth a buy then it could be worth paying attention to what that share idea is.
Of course, they could all be simultaneously be wrong, but it could be a good idea to have a closer look:
Pinnacle Investment Management Group Ltd (ASX: PNI)
Pinnacle is a business that invests in a number of investment managers to help them establish, grow and support a diverse stable of “world-class” investment management outfits.
It’s invested in sixteen different managers including Spheria, Plato, Hyperion, Coolabah and Firetrail.
The ASX share rated as a buy by at least three brokers. One of the brokers that likes Pinnacle is Macquarie Group Ltd (ASX: MQG) – it rates it as a buy with a price target of $10.11. Performance fees are becoming a larger part of the earnings and this is helping Pinnacle is going through a strong period of performance right now.
In the FY21 half-year result, Pinnacle grew net profit after tax (NPAT) by 120% to $30.3 million. Underlying expenses were roughly flat year on year.
Aggregate affiliates’ funds under management (FUM) grew 14% year on year to $70.5 billion, with retail FUM up 17% year on year to $14.3 billion.
Pinnacle wants growth to continue. The ASX share continues to invest in longer-term growth initiatives such as offshore distribution, and in servicing new, not-yet-profitable affiliates, laying the foundation for future revenue.
As a bonus for shareholders, the interim dividend was increased by 70% to 11.7 cents per share.
According to Macquarie’s profit estimates for FY21, the Pinnacle share price is valued at 28x forward earnings.
Goodman Group (ASX: GMG)
Goodman is one of the largest property businesses in the world. It actually has $51.8 billion of total assets under management (AUM) – this was an increase of 5% year on year in the half-year result.
The ASX share is rated as a buy by at least six brokers. One of the brokers that likes Goodman is Citi, which has a price target of $21 for Goodman.
It owns a large portfolio of logistics and warehouse properties around the world. Goodman is a beneficiary of the trend of online shopping growth, which Citi pointed out has seen a stronger growth profile over the last 12 months.
The FY21 half-year result included operating profit growth of 16% to $614.9 million, with operating earnings per share (EPS) rising 15% to 33.1 cents. Statutory profit came in at $1.04 billion after a $1.5 billion positive revaluation across the group and partnerships with a global weighted average cap rate (WACR) of 4.7%. The distribution was 15 cents per security.
Citi did mention that rising interest rates and bond yields could be a problem, but the broker still likes it.
However, the ASX share has a very low gearing ratio of just 4.8%, with look through gearing of 16.6%. The business has net tangible assets (NTA) per security of $6.03, up 3.3% since June 2020.
Its rental portfolio continues to perform – it had an occupancy rate of 97.9% and it achieved like for like net property income growth of 3%.
Goodman has development work in progress (WIP) of $8.4 billion across 56 projects in 12 countries, with a yield on cost of 6.6%.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.