Goldman Sachs names 2 ASX shares as conviction buys

A group of business people face the camera clapping after investors voted to give Mirvac control of an AMP office fund which will likely move the AMP share price today

A group of business people face the camera clapping after investors voted to give Mirvac control of an AMP office fund which will likely move the AMP share price today

Looking for new ASX shares to buy? If you are, then you may want to check out the two listed below that are highly rated by the team at Goldman Sachs.

In fact, its analysts rate them so highly that they have them on their conviction list. Here’s what you need to know:

Iluka Resources Limited (ASX: ILU)

Goldman Sachs is a big fan of this mineral sands and rare earths company and has named it as an ASX share to buy.

Last week the broker retained its conviction buy rating and lifted its price target to $14.40. This implies potential upside of over 40% for investors over the next 12 months.

Goldman likes Iluka due to its attractive valuation and “compelling Mineral Sands and Rare Earth growth potential.” It commented:

Trading at ~0.6x NAV (A$15.04/sh). We think the market is ascribing only some value to ILU’s Wimmera and Eneabba RE projects and the high grade zircon Balranald development project. We think ILU is undervalued (on just c.3.5x EBITDA NTM) vs. key rare earth (c.13x) and mineral sands/pigment (c.5x) industry peers.

Compelling Mineral Sands and Rare Earth growth potential: We are positive on ILU’s project pipeline and forecast >40% production growth in mineral sands volumes, c.18ktpa of Rare Earths (~3.5-4ktpa of high value NdPr).

Lifestyle Communities Limited (ASX: LIC)

Another ASX share that Goldman rates highly is retirement communities company Lifestyle Communities.

Last week Goldman Sachs retained its conviction buy rating with a slightly trimmed price target of $24.30. This implies potential upside of over 50% for investors over the next 12 months.

Its analysts believe the company is well-placed to benefit from Australia’s ageing population and structural growth in demand for land lease. The broker commented:

LIC is well-placed to provide supply to a growing cohort of over 50’s with limited savings outside the family home seeking to free up equity. In the near term, we see potential modest house price declines offset by LIC’s favourable pipeline and inventory position, coupled with a strong value proposition for incoming home-owners, with the cost of an LIC home currently sitting at c.65% of the median house price (vs. company feasibility of up to 80%), thus providing pricing support.

The post Goldman Sachs names 2 ASX shares as conviction buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. 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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