Brokers think these 2 top ASX shares are buys in April 2021

Australia’s leading brokers have been searching the ASX share market for opportunities to buy.

Share prices are always changing, so some businesses may become opportunities whilst others become a bit too expensive to be called buys.

At the moment, these two ASX shares are liked by a few brokers:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is still strongly rated as a buy. The ASX retail share is rated as a buy by at least five brokers, including Citi which has a price target of $6.22.

The broker is a fan of the growing count of stores, efficiencies and economies of scale. Citi thinks that Baby Bunting can add $13 million of income if it adds 20 stores in New Zealand over time. The ASX retail share only just announced its expansion plans at the half-year result to go to the new market.

Citi likes that Baby Bunting is generally more defensive than other ASX retail shares.

Baby Bunting had a strong first half of FY21, with comparable store sales growth of 15% (or 21.8% excluding Victorian stores). The gross profit margin increased by 41 basis points to 37.4% and pro forma net profit after tax (NPAT) increased by 43.5% to $10.8 million.

The CEO and managing director of Baby Bunting, Matt Spencer, said:

Maternity and baby goods are essential products for parents and parents-to-be and are less discretionary in nature. Our strong comparable store and total sales growth performance demonstrates that we continue to deliver on our strategy of growing market share.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is an ASX share that’s also liked by at least three brokers right now, including Ord Minnett.

The broker was impressed by the FY21 half-year, which led it to an increase of the broker’s profit expectations for the funds management business over the next couple of years. One stand out feature was the reduction of costs during this period of uncertainty.

Ord Minnett has a price target of $9.68 on Pinnacle Investment Management and it thinks it’s trading at 28x FY21’s estimated earnings.

Pinnacle is invested in some of the leading Australian fund managers including Firetrail, Spheria, Coolabah and Antipodes.

In the FY21 half-year result, Pinnacle reported that earnings per share (EPS) increased by 116% to 16.7 cents and the interim dividend was increased by 70% to 11.7 cents.

This performance was driven by both a high level of performance fees as well growing funds under management (FUM) from its investments. Aggregate affiliate FUM was $70.5 billion at 31 December 2020, which was up 20% from 30 June 2020.

Net inflows for the first half was $5.5 billion, including $1.9 billion from retail investors.

Despite a number of uncertainties such as the COVID-19 pandemic, Brexit, China-US tensions, Pinnacle said that it’s “confident that our business is well placed and there is cause for optimism for what lies ahead.” It also said it’s ready to take advantage of any opportunities that may appear.

More reading

• These top 2 ASX shares should be on your watchlist
• 2 ASX shares that may be hit by Australia’s declining birth rate
• 2 ASX shares rated as strong buys by brokers
• 2 ASX shares rated as buys by many brokers
• Will the ASX share e-commerce boom last?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. 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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