Brokers really like the ASX shares in this article: Pinnacle and Inghams.
The post Top brokers have named these 2 ASX shares as buys appeared first on The Motley Fool Australia. –
Brokers have been scouring the ASX share market for opportunities and there are a couple that multiple brokers like.
A business could be an opportunity if multiple analysts think it’s a buy, though of course they could all be wrong at the same time:
Pinnacle Investment Management Group Ltd (ASX: PNI)
Pinnacle is a business that takes investment stakes in some of the leading investment managers in Australia and also helps them grow.
It’s currently rated as a buy by at least three brokers, including Macquarie Group Ltd (ASX: MQG) which is monitoring the growth of the business and has a price target of $11.37.
In the latest update, total affiliate funds under management (FUM) at 30 April 2021 of $84.9 billion was up 20.4% compared to $70.5 billion at 31 December 2020 and $58.7 billion at 30 June 2020 (up 44.6%). Total net inflows for the four months to 30 April 2021 were $9.9 billion comprising $8.1 billion of institutional funds and $1.8 billion of retail funds.
Some of the current investments include Hyperion, Plato, Solaris, Resolution Capital, Metrics Credit Partners and Coolabah Capital.
That FUM growth and outperformance from its affiliates has been translating into profit growth for the ASX share.
In the six months to 31 December 2020, net profit after tax (NPAT) increased 120% to $30.3 million, with earnings per share (EPS) rising by 116% to 17.5 cents. This funded a 70% increase of the dividend to 11.7 cents.
Based on the FY21 earnings estimate, Macquarie thinks that Pinnacle is valued at 30x this year’s projected earnings.
Inghams Group Ltd (ASX: ING)
Inghams is a large Australian poultry business that processes a huge amount of poultry each year.
It’s currently rated as a buy by at least four brokers including Credit Suisse which has a price target on $4.10. The broker likes the profit margin growth that it’s achieving thanks to efficiency improvement.
Inghams recently revealed upgraded guidance for FY21 after taking into account the current operational performance, its efficiencies implemented throughout the year and how the rest of FY21 might turn out.
There has been an improvement in general trading conditions as the impact of COVID-19 restrictions had decreased over the prior six months.
The ASX share is now expecting statutory earnings before interest, tax, depreciation and amortisation (EBITDA) in a range of between $438 million to $448 million, as well as a statutory net profit after tax (NPAT) to be in a range of between $80 million to $87 million.
Underlying EBITDA is expected to be between $203 million to $213 million. The underlying net profit after tax guidance is a range between $96 million to $103 million.
According to Credit Suisse, the Inghams share price is valued at 14x FY21’s estimated earnings.
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Motley Fool contributor Tristan Harrison 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 owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.