2 ASX shares rated as strong buys by brokers

These 2 ASX shares have been rated as strong by brokers. One of the popular stocks is gold mine Newcrest Mining Limited (ASX:NCM).
The post 2 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia. –

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There are a handful of ASX shares that multiple brokers rate as buys.

It might be worth paying attention when plenty of brokers all think the same business is worth looking at.

Either it means that most analysts are calling out a clear opportunity. Or they’re all wrong at the exact same time.

These two ASX shares are highly rated by multiple brokers:

Baby Bunting Group Ltd (ASX: BBN)

The ASX retail share that specialises in selling products for babies and infants is currently rated as a buy by at least five brokers.

One of the brokers that likes Baby Bunting is Morgan Stanley, which has a price target on the business of $6.30.

The broker is attracted to Baby Bunting’s continuing sales strength as well as its gross profit margins. Despite the heavy investment into growth, Baby Bunting is still achieving revenue growth and could reach $1 billion of annual sales in FY30.

Baby Bunting is seeing exceptionally strong online sales growth. In the first half of FY21, total online sales increased 95.9% and click and collect sales went up 218%.

All of the relevant HY21 profit margins increased, leading to solid growth for the bottom line. Total sales rose 16.6% to $217.3 million, the gross margin increased 41 basis points to 37.4%, pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) rose 29.7% to $18.5 million and pro forma net profit went up 43.5% to $10.8 million.

Private label and exclusive product revenue rose 28.2% to be 39% of total sales. It’s targeting above 40% for FY21 and continues to aim for 50% of sales to come from private label and exclusive products.

The ASX share continues to grow its store network in Australia. It currently has 59 stores and has plans for over 100. Baby Bunting also plans to open at least 10 stores in New Zealand.

According to Morgan Stanley, the baby Bunting share price is valued at 29x FY22’s estimated earnings.

Newcrest Mining Limited (ASX: NCM)

Newcrest is one of the largest gold miners in the world with a market capitalisation of just over $23 billion.

It’s currently rated as a buy by at least seven brokers including Morgans, which believes it can benefit from stronger silver and copper prices.

Morgans has a price target on Newcrest Mining over the next 12 months of $30.95.

In the quarter ending 31 March 2021, Newcrest reported that gold production was 4% lower than the prior period. However, the gold production was higher than the quarter ending 30 September 2020.

There was planned shutdown events at Cadia and Lihir as expected. On the positive side of things, Newcrest’s all-in sustaining cost for the quarter was $891 per ounce, which was $72 per ounce lower than the prior period. Newcrest said it’s very well positioned to fund organic growth opportunities, with a strong balance sheet and long-dated debt maturity profile. The balance sheet has been further improved with the early repurchase of outstanding corporate bonds and the maturity extension of existing undrawn bank debt facilities.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. 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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