Insights

3 ASX stocks are outperforming today after brokers upgraded them to “buy”

The ASX 200 surrendered its morning gains to trade flat. But these three ASX stocks are on a high after being upgraded by brokers to “buy”.
The post 3 ASX stocks are outperforming today after brokers upgraded them to “buy” appeared first on Motley Fool Australia. –

ASX broker upgrade

The S&P/ASX 200 Index (Index:^AXJO) surrendered its morning gains to trade flat. But these three ASX stocks are on a high after being upgraded by brokers to “buy”.

The Iluka Resources Limited (ASX: ILU) share price surged 3.7% to $5.31 on Monday. This makes it the third best performer on the ASX 200 after the Coca-Cola Amatil Ltd (ASX: CCL) share price and Idp Education Ltd (ASX: IEL) share price.

Upgraded to buy based on attractive peer valuation

Investors got excited about Iluka after Citigroup upgraded the stock to “buy” from “neutral”. The move comes after the broker reviewed its valuation on the mineral sands miner following the spin-off of Deterra Royalties Ord Shs (ASX: DRR).

Citi noted that the market is valuing the remaining Iluka assets at $1.67 billion before today’s share price surge, or $5.12 a share.

This is too low as the broker reckons fair value is $6.20 based on peer valuations.

Building to an upgrade

Another stock that outpaced the market today is the CSR Limited (ASX: CSR) share price. Shares in the building materials supplier gained 2.8% to $4.72 after Credit Suisse lifted its rating on the stock to “outperform” from “neutral”.

The outlook for non-residential construction is improving and that means the expected volume declines are all but reversed.

“We increase our segment weighted market forecast a cumulative ~10% to FY23 (-9% and -2% YoY in FY21 and FY22, respectively), and assume that CSR outperforms this by ~5%,” said the broker.

“This compares to [an estimated] ~3% outperformance in FY20, and 5-yearr average of ~7%.”

What’s more, detached housing construction is rebounding thanks to the government’s Homebuilder grant. This segment accounts for 51% of CSR’s revenue.

Credit Suisse upped its 12-month price target on the CSR share price to $5.30 from $4.10 a share.

Legal headwind not much of a challenge

Finally, the Mineral Resources Limited (ASX: MIN) gave shareholders a reason to smile following a bout of recent weakness. The MIN share price jumped 2.8% to $25.61 but it’s still well down from the near $30 peak it hit last month.

A legal challenge by Fortescue Metals Group Limited (ASX: FMG) is the main driver for the weakness.

Mineral Resources intends to acquire the Wonmunna Iron Ore Project from Australian Aboriginal Mining Corporation (AAMC) but FMG is trying to get the court to declare the Wonmunna mining leases invalid.

But Bell Potter isn’t concerned as it upgraded the stock to “buy” from “hold”.

“Incorporating Wonmunna has increased our FY21 EPS forecast by 2.6% and by 6.6% in FY22, resulting in our price target increasing from $28.10 to $28.50,” said Bell Potter.

“We have upgraded our recommendation to Buy, noting the pull back in the share price from >$30 to <$25, resilient iron ore pricing, plus potential new projects to increase Iron Ore exports from 20Mt in FY21 to >70Mt within 5 years.”

These Dividend Stocks Could Be Your Next Cash Kings (FREE REPORT)

Motley Fool Australia’s Dividend experts recently released a brand-new FREE report revealing 3 dividend stocks with JUICY franked dividends that could keep paying you meaty dividends for years to come.

Our team of investors think these 3 dividend stocks should be a ‘must consider’ for any savvy dividend investor. But more importantly, could potentially make Australian investors a heap of passive income.

Don’t miss out! Simply click the link below to grab your free copy and discover these 3 high conviction stocks now.

Click Here For Your Free Stock Report

Returns As of 6th October 2020

More reading

The post 3 ASX stocks are outperforming today after brokers upgraded them to “buy” appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!