4 ASX shares rated as strong buys by brokers

The four ASX shares I’m going to mention in this article are rated as ‘buys’ by several brokers.

It’s quite hard to find businesses that are both good businesses and trading at a good price. Even then, one person might say Commonwealth Bank of Australia (ASX: CBA) is a better choice and another could say that Transurban Group (ASX: TCL) is the right one.

Investment site MarketIndex regularly collates the ratings of brokers together to assess what the broker community collectively think are opportunities. Of course, this still isn’t a guarantee of success – they could all be herding together.

With that in mind, here are four ASX shares that brokers like:

Bapcor Ltd (ASX: BAP)

Bapcor is rated as a buy by at least nine analysts.

The auto parts business has been doing extremely well since the initial COVID-19 lockdowns. The Bapcor share price has gone up by 21% in October and it’s up 77% over the past six months.

I think it’s still an ASX share worth buying because of its medium-term growth prospects.

The company recently announced a trading update for the first quarter of FY21. It showed strong growth despite restrictions in Victoria and Auckland. Burson Trade revenue was up 10%, New Zealand revenue was up 6%, retail revenue was up 47% and specialist wholesale revenue was up 45%. Overall, revenue was up 27%. This should deliver a solid first half result for FY21.

It’s still trading at just 23x FY22’s estimated earnings. On the positive side, investors should watch the expansion in Asia. However, electric vehicles could be a longer-term negative.

Santos Ltd (ASX: STO) and Oil Search Ltd (ASX: OSH)

Santos is rated as a buy by at least 14 analysts. Oil Search is rated as a buy by at least 13 analysts.

The oil sector has really been hurt by COVID-19 impacts. The oil price was heavily punished  earlier this year because of the lack of transportation activity in the first half of 2020, and today to a lesser extent. Supply and demand is a big factor.

However, the oil price has recovered quite a lot of the lost ground and this could be good news for ASX shares like Santos and Oil Search. There is also the prospect of further price increases for oil as economies return to a new normal. It could also be helpful if air travel starts recovering next year as well.

The share prices of both Santos and Oil Search have been drifting lower in recent weeks. This could be a shorter-term opportunity to buy shares for resource investors.

NEXTDC Ltd (ASX: NXT)

Nextdc is rated as a buy by at least 12 analysts.

One of the main trends from resulting from COVID-19 has been more digital demand. More online shopping, more online entertainment, more working from home, more learning from home and so on.

Nextdc is indirectly exposed to all of these different sectors as it’s a large data centre provider. It works with many of the leading technology businesses to provide the capacity they need to service the people in Australia’s capital cities.

The long-term growth of data demand is one of those growth runways which has really good prospects.

The ASX share is steadily investing in building new data centres and clients are buying capacity there.

Foolish takeaway

I’ve never been a fan of investing in resource ASX shares, though I see the appeal in oil businesses at the moment.

Nextdc has really great long-term prospects. The higher Nextdc valuation makes more sense with Australia’s ultra-low interest rates. I’m not sure how much earnings Nextdc can generate in FY25, but it may be worth owning a piece at today’s share price.

Bapcor looks like the most reasonably valued with good profit prospects, so I’d probably go for that one first, particularly if its Asian growth goes well.

But there are other ASX share opportunities at the moment that I have my eyes on.

More reading

• Top brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Wednesday
• Top brokers are urging you to buy these ASX stocks today
• Why Afterpay, HUB24, NEXTDC, & Telstra shares are storming higher
• This ASX share is recession-proof

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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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