Most investors will be sitting on their hands with the reporting season this close, but top brokers are urging you to buy these S&P/ASX 200 Index (Index:^AXJO) shares today.
The profit results season kicks off in just two weeks and many are understandably nervous due to the uncertainty caused by the COVID-19 pandemic.
While this isn’t usually the time to be making big bets, there are two ASX stocks that most leading brokers are recommending investors buy.
Conviction buy
The QBE Insurance Group Ltd (ASX: QBE) share price is one that’s expected to outperform with Goldman Sachs putting the insurer on its conviction buy list.
While the broker acknowledged the “great deal of uncertainty” as we head into QBE’s result, it’s confident the stock is cheap after undertaking a mark-to-market assessment of QBE’s investments in the June quarter.
Goldman’s 12-month price target on the stock is $11.26 a share.
Restarting dividends
Citigroup is also bullish on the stock as it reiterated its “buy” rating on QBE yesterday. The broker believes conditions have improved enough for the insurer to issue a token 2 cents a share dividend next month.
“QBE has a number of transitory uncertainties causing the market some concern,” said Citigroup.
“However, we see ongoing improvements in the rate environment, which should ultimately lead to underlying margin improvement, as likely to be a more lasting share price driver.”
Citigroup lifted its price target on QBE to $11 from $10.55 a share.
Regaining its shine
Another ASX 200 stock that’s shaping up to be a popular “buy” rated stock among brokers is the Alumina Limited (ASX: AWC) share price.
Credit Suisse become the latest believer in the stock as it upgraded Alumina to “outperform” from “neutral” today.
Demand for aluminium is improving, imports of alumina into China remains strong and the price increase in aluminium is running ahead of Alumina’s share price.
“No disputing the global macro outlook remains uncertain and we still expect volatility,” said Credit Suisse.
“That said, we see enough indicators to suggest AWC can perform well over the next 12 months.
“In the very least the assets and balance sheet provide a reasonable hedge to the downside if conditions and pricing turn for the worse again.”
Potential upgrade cycle
UBS is another bull. The broker reiterated its “buy” call on the stock after Aloca (Alumina’s joint venture partner) posted a second quarter result that was well ahead of expectations.
What’s more, UBS said that Alumina’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin would jump to US$70 a tonne from US$64 a tonne if the spot commodity price was used.
The broker’s 12-month price target on AWC is $2 a share.
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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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