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3 ASX shares Goldman Sachs rates as conviction buys

Here are three ASX shares Goldman is very bullish on…
The post 3 ASX shares Goldman Sachs rates as conviction buys appeared first on The Motley Fool Australia. –

As readers will be aware, brokers across Australia dish out buy ratings and sell ratings on shares periodically.

And while there are plenty of shares that brokers think are buys, often there are a few that they are especially bullish on. For these shares, they reserve a spot for them on highly coveted conviction lists.

The team at Goldman Sachs has recently provided updates on several shares that it has on its conviction lists. In light of this, I thought I would give readers a quick summary on what the broker is saying about them.

They are as follows:

Elders Ltd (ASX: ELD)

Goldman Sachs has a conviction buy rating and $15.65 price target on this agribusiness company’s shares. The broker is attracted to the long term opportunity for Elders. It notes that its bullish view is supported by a number of growth drivers.

These include the rationalisation of the rural services industry, margin expansion through backward integration, its strong balance sheet and cash flow, and the benefits of its large scale systems modernisation project. Goldman expects the latter to establish a more customer-centric business as well as deliver operational efficiencies.

Lifestyle Communities Limited (ASX: LIC)

Earlier this week Goldman retained its conviction buy rating and $21.60 price target on this retirement communities company. Goldman believes Lifestyle Communities is well-placed to benefit from Australia’s ageing population.

It explained: “We believe LIC is well positioned to benefit from shifting demographic trends, as its business helps address some critical emerging social issues. Its core business is to provide affordable housing to an ageing population, addressing a key social issue that is becoming more prevalent as the proportion of over 50’s increases. We expect as this population cohort continues to grow, this should deliver structural growth for the industry; we expect demand to far outpace supply at current build rates.”

National Australia Bank Ltd (ASX: NAB)

Finally, the broker has a conviction buy rating and $31.15 price target on this banking giant’s shares. Goldman likes NAB largely due to the progress of its cost management initiatives and its strong position in business banking.

It explained: “We reiterate our Buy (on CL) on NAB and it remains our preferred sector exposure given: i) NAB’s cost management initiatives, which seem further progressed relative to peers, have freed up investment spend to be more directed towards customer experience (50% in FY22 from 39% in FY21) as opposed to infrastructure; ii) given NAB’s position as the largest business bank, we believe it will benefit more from the continued economic recovery (management is seeing all segments in its Business & Private Bank exhibiting solid growth without sacrificing margin, and asset quality remains pristine); iii) good balance sheet momentum with NAB expecting at or above system growth across all divisions.”

The post 3 ASX shares Goldman Sachs rates as conviction buys appeared first on The Motley Fool Australia.

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More reading

Why is the NAB (ASX:NAB) share price outperforming the other big banks over the past month?

What’s going wrong for ASX 200 bank shares on Wednesday?

5 things to watch on the ASX 200 on Tuesday

Elders (ASX:ELD) share price slips despite 22% profit leap

ASX 200 (ASX:XJO) midday update: Incitec Pivot and Mesoblast jump, NAB drops

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 recommended Elders Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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