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The Transurban (ASX:TCL) share price is up only 1% this year. Is it a buy?

Should investors be snapping up this toll road operator’s shares?
The post The Transurban (ASX:TCL) share price is up only 1% this year. Is it a buy? appeared first on The Motley Fool Australia. –

The Transurban Group (ASX: TCL) share price has been underperforming so far this year.

Since the start of the year, the toll road operator’s shares have risen just 1%.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) is up almost 11% over the same period.

Is the Transurban share price in the buy zone?

One leading broker that sees value in the Transurban share price at the current level is Ord Minnett.

According to a recent note, the broker has retained its buy rating but trimmed its price target on the company’s shares to $15.50.

Based on the current Transurban share price of $13.85, this implies potential upside of 12% over the next 12 months.

And with Ord Minnett pencilling in a dividend of 36.5 cents per share in FY 2022, this potential return stretches to approximately 14.5%.

Why is the broker bullish?

While the broker has revised its free cash estimates lower to reflect the impact of lockdowns on traffic volumes, it remains positive on the future. This is due partly to its belief that traffic will rebound quickly once restrictions ease.

In addition to this, the broker believes the Transurban share price is not reflective of the value of its assets. Particularly given how long life infrastructure assets are in demand with investors. It points to the sale of stakes in some of its US assets as evidence of this demand.

Ord Minnett commented: “We believe the market value of Transurban’s assets remains well ahead of the implied value.”

“We believe this supports the underlying thesis on Transurban and is more important than the short-term impact lockdowns are having on traffic and free cash flow,” it added.

Overall, the broker believes this makes the weakness in the Transurban share price this year a buying opportunity for investors.

The post The Transurban (ASX:TCL) share price is up only 1% this year. Is it a buy? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Transurban right now?

Before you consider Transurban, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Transurban wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

2 more of the best ASX share ideas according to this leading broker

Analysts name 2 ASX dividend shares to buy now

Transurban (ASX:TCL) share price slides as WestConnex bid day arrives
2 buy-rated ASX dividend shares with attractive yields

Transurban (ASX:TCL) share price could get boost from WestConnex rumour

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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