There are some great ASX shares that are rated as buys by brokers right now, including discount retailer Reject Shop Ltd (ASX:TRS).
The post 3 top ASX shares rated as buys by brokers appeared first on The Motley Fool Australia. –
Brokers have been busy looking at finding the best opportunities among all of the ASX shares.
As share prices change, it can open up different businesses to being potential buys.
These ASX shares are currently rated as buys by leading brokers:
Reject Shop Ltd (ASX: TRS)
Reject Shop is one ASX retail share that’s liked by a few different brokers, including Morgan Stanley which currently rates it as a buy. The Reject Shop share price target is $10, which suggests potential upside of around 60% over the next year.
The net profit in the FY21 half-year result was stronger than expected and that led the broker to increasing its expectations for the full year result. It’s now expecting FY21 earnings per share (EPS) to be $0.21, which means it’s valued at 29x FY21’s estimated earnings.
That result released in February 2021 showed a 20.8% increase of underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $31.1 million and a 46.5% rise in underlying net profit after tax (NPAT) to $16.3 million.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare is an healthcare ASX share that is involved in pathology in numerous countries in Europe as well as Australia and the US.
One broker that likes Sonic Healthcare is Credit Suisse, which rates the business as a buy. The Sonic Healthcare share price target is $40, which suggests potential upside of more than 20% over the next year.
A key boost for Sonic, according to Credit Suisse, is that high levels of Australian government funding will remain for the rest of the 2021 calendar year. The broker also believes that Sonic will benefit from higher organic growth in the medium-term.
The FY21 half-year result was strong with 33% revenue growth to $4.4 billion, EBITDA growth of 89% to $1.3 billion and net profit growth of 166% to $678 million.
Sonic is seeing a significant revenue and earnings contribution from COVID-19 testing, which is leveraging existing infrastructure. At the time, it said more than 18 million COVID-19 PCR tests had been performed to date in Sonic locations globally.
Revenue excluding COVID-19 tests was flat. There was profit margin improvement in both the laboratory and imaging operations.
City Chic Collective Ltd (ASX: CCX)
City Chic is an ASX retail share that sells apparel, footwear and accessories for plus-size women.
The company operates under a number of different brands, including City Chic, Evans in the UK and Avenue in the US.
One of the brokers that likes City Chic is Morgan Stanley, it rates it as a buy with a share price target of $4.75.
Morgan Stanley is attracted to the e-commerce sales growth that City Chic is generating, which comes with growing profit margins.
In the FY21 half-year result, City Chic generated 24.8% growth of net profit after tax (NPAT) to $13.1 million. EBITDA rose 21.8% to $23.3 million and the EBTIDA margin improved from 18.2% to 19.6%.
The City Chic share price is valued at 30x FY22’s estimated earnings according to Morgan Stanley’s projections.
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*Returns as of February 15th 2021
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.