3 ASX shares rated as strong buys by brokers

The 3 ASX shares in this article have been rated as strong buys by brokers. One of those ideas is auto parts business Bapcor Ltd (ASX:BAP).
The post 3 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia. –

hand holding wooden blocks spelling the word buy

There are some ASX shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

Bapcor Ltd (ASX: BAP)

Bapcor is the largest automotive parts business in Australia and New Zealand. It operates a number of different brands including Burson, Autobarn, Precision Automotive equipment, Truck and Trailer Parts, Truckline, Midas and ABS.. It’s rated by a buy by at least six brokers.

The company has been generating large growth despite, or perhaps because of, the impacts of COVID-19.

For the five months to the end of November 2020, revenue was up 26%. Net profit after tax (NPAT) achieved operating leverage from lower expenses in areas like travel and other areas of discretionary spending, as well as lower interest rates and the contribution from Truckline which wasn’t in the prior corresponding period.

Bapcor has provided guidance for the first half of FY21 that it thinks revenue will increase by 25% and net profit after tax (NPAT) will go up by over 50% because of the operating leverage.

According to Commsec, the Bapcor share price is valued at 19x FY23’s estimated earnings.

Brickworks Limited (ASX: BKW)

The building products company is another ASX share that brokers really like. It makes a variety of products like bricks, paving, masonry, precast and roofing. It’s liked by at least four analysts.

Brickworks has three (or four) distinct divisions. It owns a large amount of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. The ASX share has an industrial property trust joint venture with Goodman Group (ASX: GMG) which has been steadily growing over the past decade. That trust is currently building warehouses for both Amazon and Coles Group Ltd (ASX: COL) which is expected to increase the gross assets to more than $3 billion.

The ASX share is seeing a recovery in the Australian building products market, spurred on by government stimulus.

However in the American market, where Brickworks has a presence, it’s still finding it tough with the ongoing COVID-19 pandemic and the associated effects.

According to Commsec, the Brickworks share price is valued at 17x FY21’s estimated earnings.  

City Chic Collective Ltd (ASX: CCX)

It sells plus-size clothing, footwear and accessories to women. It has a number of brands including City Chic, Avenue, CCX, Hips & Curves and Fox & Royal. City Chic has around 100 stores across Australia and New Zealand. It has websites for local and US customers, it has marketplace and wholesale partnerships with major US retailers such as Macys and Nordstrom, and a wholesale business with European and UK partners such as ASOS and Zalando.

City Chic is rated as a buy by at least three brokers.

One of the key changes for brokers in recent times has been the acquisition of Evans by the ASX share. City Chic acquired Evans for $41 million from Arcadia Group, which has gone into administration. Evans is a UK-based retailer of women’s plus-size clothing with a longstanding customer base and sizeable market position.

Just looking at the online sales of Evans alone, the website made £23 million of sales. The wholesale business also made £3 million of sales. The overall Evans group of businesses, including the stores and franchise, made £60 million of annual sales before COVID-19 came along.

According to Commsec, the City Chic share price is valued at 25x FY23’s estimated earnings.

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Macquarie Group Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia.

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