Why Morgans rates this ASX lithium share and this retail share as buys

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movementsA happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movementsThe team at Morgans has been very busy in recent weeks responding to results and updating their forecasts and recommendations.

Two ASX shares that came out of the process favourably are listed below. Here’s why the broker thinks they are buys now:

Allkem Ltd (ASX: AKE)

This lithium giant is held in high regard by analysts at Morgans. So much so, this week the broker retained its add rating and lifted its price target by 24% to $14.83.

Its analysts were pleased with Allkem’s update and believe that lithium prices will remain strong for some time to come. Particularly given how rising oil prices are likely to accelerate the structural shift towards electrification.

Morgans commented: “AKE is a pure play lithium producer with diversified products (spodumene, LiCO and borax) and geographies (WA and Argentina) that is set to expand. The almost completed Naraha plant will allow AKE to grow vertically into the lithium hydroxide market, supported by increased Argentinian brine production. The lithium market has seen strong price increases in CY21 but we don’t see signs of a break to this momentum yet. We expect EV demand to remain strong with geopolitical events and a potentially tight oil market accelerating the shift towards electrification.”

Lovisa Holdings Ltd (ASX: LOV)

This fashion jewellery retailer is another ASX share that Morgans rates highly. The broker currently has an add rating and $24.00 price target on its shares.

Morgans has suggested that the company could prove to be one of the biggest success stories in Australian retail. It sees a huge opportunity for Lovisa to expand internationally and appears confident that it has the management team to execute on this.

It said: LOV may just prove to be one of the biggest success stories in Australian retail. With ambitious (and financially well-incentivised) new leadership in place, we think now is the time LOV steps up to become a global force. Investment will be needed to expand LOV’s network in the US and Europe and to take it into new markets, but the returns could be stellar.”

The post Why Morgans rates this ASX lithium share and this retail share as buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns Orocobre Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Lovisa Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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