Latest 3 ASX buy ideas from leading brokers

Investors should be more confident about buying the dips as our market has a tendency to recover from early losses.

Today was no exception with the S&P/ASX 200 Index (Index:^AXJO) clawing its way back to the black.

If you are looking for stocks to put on your watchlist, these three stocks are among the latest “buy” ideas from leading brokers.

Riding on a cloud

One stock worth considering is scrap metal company Sims Ltd (ASX: SMG), according to UBS.

The broker upgraded the stock to “buy” from “neutral” today even though the stock is impacted by the lack of earnings visibility and volatile scrape prices.

“However, at 0.8-0.9x NTA [net tangible asset] and with scrap markets expected to improve from here as the US economy reopens, the discount is too wide,” said UBS.

“In addition, SGM’s push into cloud recycling offers the opportunity for more stable volumes and growth as cloud IT refresh cycles fall.”

Cloud recycling is the recycling of computer servers and other IT equipment used in cloud computing. It’s related to e-recycling and Sim’s expansion into this space was triggered by the exit of a key competitor.

UBS’s price target on Sims is $10.20 a share.

Shining bright

Meanwhile, JP Morgan initiated coverage on Gold Road Resources Ltd (ASX: GOR) with an “overweight” recommendation as GOR potentially offers the best returns among gold miners under the broker’s coverage.

Gold Road’s 50% owned Gruyere project is the main reason for the broker’s enthusiasm as that is a large and long-life mine based in Western Australia.

“These are scarce and valuable qualities in this gold-focused, and negative real yield environment,” said JP Morgan.

“We see clear potential to add value to the current Gruyere operation by increasing production rates, extending mine life and finding more gold.”

The broker’s price target on the stock is $1.95 a share, which implies a 30% upside.

Positive trends

Finally, Macquarie Group Ltd (ASX: MQG) reiterated its “outperform” call on Domino’s Pizza Enterprises Ltd. (ASX: DMP) after the fast food chain’s trading update.

Domino’s is benefiting from the COVID-19 shutdown as demand increased from stay-at-home consumers.

The broker also noted that the company’s supply chain isn’t impacted by the pandemic and that management is increasing their advertising spend when competitors are hunkering down.

“Summer is normally slower in Europe given ~30% of population is abroad at any time, but this season will be unusual given many consumers will not be travelling,” said Macquarie.

The broker’s 12-month price target on the stock is $66.10 a share.

More reading

• How Australian super funds are letting the team down on ethics
• Here are another 2 insanely cheap ASX 200 shares to buy right now
• 2 crazy cheap ASX 200 shares you could still buy
• These ASX bank stocks just got upgraded by top brokers to “buy” – and they aren’t the big four
• Does the ASX 200 just follow the US markets?

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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