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3 compelling ASX shares rated as buys by brokers

The 3 ASX shares in this article are rated as buys by several brokers. One of those picks is supermarket business Coles Group Ltd (ASX:COL).
The post 3 compelling ASX shares rated as buys by brokers appeared first on Motley Fool Australia. –

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The three ASX shares I’m going to mention in this article are rated as ‘buys’ by several brokers.

Broker recommendations give an indication where market analysts think there are buying opportunities for investors. Share prices change all the time, so sometimes a broker could think an ASX share is a buy at one price and perhaps a sell if it were significantly higher.

Investment site MarketIndex regularly collates the ratings of brokers together to assess what the broker community collectively think are opportunities. Just because several brokers think something is a buy doesn’t mean it’s guaranteed to do well, but it may reveal some insights.

With that in mind, here are three ASX shares that brokers like:

BHP Group Ltd (ASX: BHP)

BHP Group is one of the largest resource businesses in the world. The ASX share produces a number of commodities including iron ore, copper and oil.

According to the ASX, it has a market capitalisation of $106 billion, making it one of the biggest businesses listed in Australia.

BHP is rated as a buy by at least 10 analysts, although there are also at least six that think it’s only a ‘hold’.

The BHP share price is down 7.5% since the start of 2020, though it fell to almost $25 in March. In FY20 BHP reported that its continuing profit from operations declined by 11%, however underlying attributable profit only declined by 4%. This result was supported by stronger iron ore prices and continuing Chinese demand, which mostly offset weaker markets in coal and petroleum.

BHP’s FY20 dividend was cut by 10% to US$1.20 per share. Using the same dollar in Australian dollars, it offers a trailing grossed-up dividend yield of 6.9%.

Coles Group Ltd (ASX: COL)

Coles is one of Australia’s biggest supermarket businesses. It operates a nationwide network of Coles supermarkets, as well as a liquor business with brands such as Liquorland.

According to the ASX, Coles has a market capitalisation of $23.6 billion, it’s one of the largest 20 ASX shares.

Coles is rated as a buy by at least eight analysts, though it’s rated as a ‘hold’ by at least five as well.

The supermarket ASX share recently reported in its FY21 first quarter that its food sales continue to be elevated with Victoria’s COVID-19 restrictions. In the first quarter, supermarket sales rose 9.8% and total first quarter sales grew 10.5% after it was helped by liquor sales going up 17.4%.

That quarter came after FY20 sales increased by 6.9% and underlying net profit grew by 7.1%.

At the current Coles share price, it has a trailing grossed-up dividend yield of 4.6%. It’s also trading at 23x FY21’s estimated earnings according to Commsec.

GPT Group (ASX: GPT)

GPT is one of the largest property groups on the ASX, with a market capitalisation of approximately $9.2 billion.

It’s rated as a buy by at least nine analysts, though there are also two that believe it’s a ‘sell’.

GPT has a mix of retail, office and logistics buildings in its property portfolio.  

In its recent FY20 first half result it reported negative property valuation movements of $711.3 million as a result of effects of the pandemic on its retail assets. However, it still generated funds from operations (FFO) – net rental profit – of $244.5 million which allowed it to pay a distribution of 9.3 cents per unit.

In its latest quarterly operational update for the three months to 30 September 2020, it said that its rent collection rates averaged 90% of third quarter billings, up from 67% in the second quarter.

Whilst it still wasn’t able to provide distribution guidance, Commsec has a distribution forecast of 18.8 cents for 2020, which translates to a distribution yield of 4% at the current GPT share price.

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

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