The wild gyrations on the market are throwing up some opportunities for ASX investors with leading brokers upgrading a few ASX shares today.
The S&P/ASX 200 Index (Index:^AXJO) recorded its best gain in two months as it surged by over 4% on Tuesday.
That’s a marked turnaround from the recent heavy sell-off due to worries of a second COVID-19 wave of infections.
I doubt we have seen the last of the big swings in the market but those looking to buy well-priced ASX stocks during the turmoil might want to put the following two upgraders on their watchlist.
More left in the tank
The first is the Super Retail Group Ltd (ASX: SUL) share price. Never mind that the outdoor and auto accessories retailer’s shares jumped a whopping 9.9% on Tuesday to $8.58.
Morgans thinks there’s more upside as it upgraded its recommendation on Super Retail to “add” from “hold”.
The change in rating comes after management’s trading update and a $203 million capital raising.
“We think SUL can now attract a higher market rating given the resilience its businesses have shown throughout COVID and the restructured balance sheet,” said the broker.
“Its businesses also look well placed to benefit from some key thematics including: increased domestic tourism and leisure activities, home-based fitness and a general acceleration in online consumption.”
Morgans upped its price target to $9.25 from $7.84 a share.
Good medicine
The Healius Ltd (ASX: HLS) share price also got a boost after Credit Suisse upgraded its call on the stock to “outperform” from “neutral” today.
The broker’s bullish recommendation comes on the back of the sale of Healius’ medical centres to private equity outfit BGH Capital for $500 million.
That’s more than what Credit Suisse thought the assets were worth but that isn’t the only thing that got Credit Suisse excited.
Revenues from the group’s pathology and radiology divisions have also improved significantly in recent weeks.
The divestment allows management to focus on growing these businesses and to play catch up with rival Sonic Healthcare Limited (ASX: SHL).
“HLS is currently trading on 10.6x FY21 EBITDA, which is relatively in line with the multiple paid for Medical Centres, the least attractive & lowest return generating business unit,” said Credit Suisse.
“In our view, Pathology and Imaging deserve to trade at higher multiples.”
The broker’s 12-month price target on Healius is $3.25 a share.
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More reading
- 3 ASX 200 shares to buy for income and growth
- Why I think this ASX 200 rally is fake
- UBS picks the best ASX retail stocks for the post COVID-19 world
- 3 fantastic ASX 200 shares to buy right now
- Leading brokers name 3 ASX 200 shares to sell today
Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Sonic Healthcare 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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