The Australian stock market is at all-time highs, so are there any bargains left? Four experts have 3 tips for you.
The post 3 ASX shares ready to go off this year: experts appeared first on The Motley Fool Australia. –
With the S&P/ASX 200 Index (ASX: XJO) at all-time highs, it can be a struggle to find bargains.
Sure, there are plenty of quality companies, but are they all fully priced for their potential?
According to four experts, there are still 3 stocks that look like they have plenty of upsides this year.
Nextdc Ltd (ASX: NXT)
The data centre provider’s share price has never really taken off consistently in the way its fans would like.
But with the COVID-19 pandemic pushing up demand for computing infrastructure, NextDC shares have gone up more than 23% in the past year. Nothing to sneeze at.
And they’ve gained 240% in the past 5 years, which is pretty handsome growth.
Morgans head of Asian desk, Raymond Chan, is betting that the coming quarter might see another spike up.
“It’s all eyes on… how many of the optional [client] contracts are exercised in the next 3 months,” he told SwitzerTV Investing.
Chan said June is usually the time when client renewals are announced, but he suspects that’s delayed this year due to the pandemic.
“That [delay] may impact the share price, but if we see some contract wins that will be a catalyst for NextDC to move to the next level.”
United Malt Group Ltd (ASX: UMG)
One decidedly low-tech stock compared to NextDC is United Malt, which produces malt for alcoholic drink producers.
Wilson Asset Management portfolio managers Matthew Haupt, Catriona Burns and Oscar Oberg reckon this is a major post-COVID recovery play.
“We remain positive on agricultural stocks and have transitioned more into those set to benefit from tailwinds in the re-opening trade,” they wrote in a memo to clients.
“[United] is the world’s fourth-largest commercial maltster, operating as a network of companies spanning North America, the UK and Australia. It also operates an international distribution business, providing a full-service offering for craft brewers and distillers.”
The business’ big markets of North America and Britain had been hit hard by drinkers not going out to the pub in the past 18 months.
“Now, the company stands to benefit from increased patronage in restaurants and pubs, as the US and UK economies recover and reopen,” the memo read.
“United Malt Group also has a series of initiatives to support growth, including an upgrade and expansion of its malting capacity in the UK and investment in a bespoke craft warehouse and distribution centre in Victoria.”
United shares are up almost 9% this year, trading at $4.51 on Friday afternoon.
Computershare Ltd (ASX: CPU)
The Motley Fool reported last week how the share registry provider was perfectly placed to profit from rising interest rates.
It works like this: Computershare temporarily holds dividends and acquisition proceeds that are headed to shareholders. This pool of funds earns short-term interest.
This money-spinner has been struggling the past 18 months with near-zero rates in Australia.
Chan agreed that this situation would turn around soon.
“I would see Computershare as an interesting stock as an inflation hedge,” he said.
“Computershare is one of the few that can leverage on the upside of rising interest rates… You can imagine in the future if the interest rates continue to go back up because of inflation, it will earn more money.”
Many investors have already locked into Computershare stocks, with the price going up almost 19% this year and nearly 33% in the past 12 months.
But Chan reckons the porridge is still just right.
“The PE [ratio] is not too low, but certainly not too high — around 22 times at the moment.”
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns shares of Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), and Salesforce.com. The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.