Analysts' IntelligenceCompanies

Some investment ideas

4 Jun 2021 3 month(s) ago

Where one broker is looking at investment options in the market.

The recommendations of brokers are usually targeted mainly to institutional investors, who tend to move some of their holdings more often than retail investors, who are more likely to hold than trade. That may well mean they are not ideally suited to SMSF investors, who are also less likely to be involved in regular trades (although some SMSF owners may like to trade regularly).

That is worth remembering when assessing their value. It is also worth remembering that broker recommendations may be linked to how close the listed  companies are to the corporate arm of the stockbroker itself. Here are some of Morgans latest recommendations for large cap stocks:

  • Coles; a price target of $18.50 and a dividend yield of 3.9%. “While vaccines are being rolled out across Australia, we think people will continue to spend more time at home due to the risk of COVID flare-ups with the working-from-home trend also likely to stay for some time. This will be beneficial for the major supermarket operators. We continue to prefer COL 4% yield) over Woolworths (3% yield) mainly due to valuation.”
  • Santos, price target $8.40, dividend yield 2.9%. “We expect the resilience of Santos’ growth profile and diversified earnings base see it best placed to outperform against a backdrop of a continuing broader sector recovery. PNG growth meanwhile remains a riskier proposition, with the government adamant it will keep a larger share of economic rents.”
  • Macquarie Group; price target $171.00, dividend yield 3.5%. “We still see Macquarie as relatively inexpensive and continue to like its exposure to long-term structural growth areas such as infrastructure and renewables.”
  • QBE; price target $11.83, 4.6%. “We see QBE as likely having positive underlying momentum into next year. QBE has been putting through top-line rate increases of around 9% in 1H20, which should assist margin expansion into FY21.”
  • ANZ; price target $34.50, dividend yield 5.7%. “We believe ANZ is the most compelling of the major banks on a valuation basis. We expect ANZ to benefit the most of the major banks from the tailwinds currently in place for treasury and markets income. ANZ has de-risked its loan book over recent years – particularly its institutional loan book – such that the quality of its loan book has increased.”
  • Sonic Health Care; price target $36.15; dividend yield 3.1%. “We see COVID-19 testing continuing into the foreseeable future, with growth potential in COVID serology testing.”
  • Sydney Airport; price target $7.03, dividend yield 1.7%. “Revenues have been badly affected by COVID-19-related government travel restrictions. For the short term SYD is no longer a yield stock (we do not expect it to pay a distribution until 2022/23). It is a capital growth play.”

Morgans also looks at mid cap companies TPG Group (price target $7.17), Magellan Financial Group ($58.28), Ansell ($46.6), Resmed ($29.14), Reliance World Wide ($5.50) and Incitec Pivot ($2.92).


Reader note: These is general reporting only and should not be considered in any way to be investment or tax advice. For more information please read our disclosure statement.


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