Brokers have rated the ASX shares in this article as compelling investment ideas, including City Chic Collective Ltd (ASX:CCX).
The post 3 compelling ASX shares rated as buys by brokers appeared first on The Motley Fool Australia. –
Brokers are constantly looking at the ASX share market, deciding which businesses look like promising ideas and which ones look expensive.
The below ASX shares have been rated as buys by at least three brokers:
City Chic Collective Ltd (ASX: CCX)
City Chic is a retail business which specialises in plus-size apparel, footwear and accessories for women.
It’s currently liked by at least three brokers.
It operates a variety of different brands. It owns City Chic, Avenue, CCX, Hips & Curves, Fox & Royal. It has a network of almost 100 stores across Australia and New Zealand. It also has websites operating in Australia, New Zealand and the US. On top of that, it has marketplace and wholesale partnerships with big retailers in the US like Macys and Nordstrom, and a wholesale business with European and UK partners such as ASOS and Zalando.
Avenue targets value-conscious women with a long history and significant online customer following in the US. Hips & Curves and Fox & Royal are online intimates brands in the US and ANZ respectively.
One of the main reasons why brokers such as Morgan Stanley like the ASX share is that the retail apparel sector is doing well, as seen with updates from other apparel companies.
Morgan Stanley likes the balance sheet strength of the business, which could fund other acquisitions. City Chic recently announced the acquisition of Evans in the UK.
Reject Shop Ltd (ASX: TRS)
Reject Shop is a discount retailer in Australia. It’s currently liked by at least three brokers.
The ASX share is currently going through the process of trying to lower its cost base. Morgan Stanley pointed out that Reject Shop’s management said at the AGM that the strategy is going according to plan.
Reject Shop could be a beneficiary from customers spending more time at home, it’s also working on providing a smaller number of different products so that there’s more product availability of the remaining items for customers and so that it has better buying power with suppliers.
One of the other ways that Reject Shop is looking to improve margins is by renegotiating many of its leases with landlords.
Once the company’s cost base is set at a sustainable level, it’s expected to pursue longer-term growth through store network expansion and e-commerce.
However, there have been delays at Australian ports which is affecting stock availability and increased costs through higher shopping charges.
Bapcor Ltd (ASX: BAP)
Bapcor claims to be the largest auto parts business in Australasia.
This ASX share is currently liked by at least six brokers.
The company is seeing elevated levels of demand during these strange times.
Trade and wholesale represent over 80% of Bapcor’s business, with retail representing around 20%. Management said that trade focussed businesses perform solidly in difficult economy conditions, which is being demonstrated by the current levels of performance.
Bapcor said that retail businesses continue to gain momentum with revenue up 40% over the prior corresponding period in the first half of FY21. The company has implemented a number of initiatives to help growth. That includes a new Autobarn store format which is delivering a significant uplift in sales. It has also improved its e-commerce capabilities and continued to open new locations.
One of the other things that Bapcor is doing to improve profit margins is that it’s building a new distribution centre for Victoria. The automated picking system is expected to be operational by August 2021. Management believe this will offer significant operational benefits.
In the first half of FY21, Bapcor is expecting profit growth of at least 50%.
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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 Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.