The Alumina Limited (ASX: AWC) share price and Stockland Corporation Ltd (ASX: SGP) share price are likely to outperform even as doubts emerge on the short-term direction for the S&P/ASX 200 Index (Index:^AXJO).

The bullish take on both stocks come from Morgan Stanley, which is predicting that their share prices will rise in absolute terms over the next 60 days.

If the broker’s prediction is right, it would be a welcomed relief for shareholders as the aluminium producer and property group have underperformed since the COVID-19 outbreak.

The disruption to the global economy has weighed on the price of alumina, while pressure on residential and retail properties have put real estate stocks in the sin bin.

But this may be about to change.

Set for a rebound

“The alumina price is bouncing off support levels, with AWC offering a clean exposure (CY20e 5% aluminium revenue exposure),” said the broker.

“We expect unprofitable alumina producers to exit the market, given the ease of shutting and restarting refineries.

“We think 2020 will provide the low-point for alumina input costs, and cost inflation could help to buoy prices.”

Dividend looks safe

While no one believes the price of the commodity is set to surge, Morgan Stanley believes it will hover somewhere below the marginal cost of production of Chinese smelters, which is estimated at around US$285 a tonne.

At that price, Alumina is well placed to generate a decent dividend for investors at around 4.5% in calendar 2020 and 3.4% the following year.

It’s not a big dividend but it’s enough to compensate investors to hang on to the stock in anticipation of the alumina price recovery.

Morgan Stanley estimates there is a 70% to 80% chance that the Alumina share price will rise in the next two months. The broker’s recommendation on the stock is “overweight” (or “buy”) with a $2.05 a share price target.

HomeBuilder stimulates Stockland

Meanwhile, Morgan Stanley is tipping a 60% to 70% chance that the Stockland share price will trend in the same direction over a similar period.

This is thanks to the recently announced $688 million HomeBuilder grant from the federal government.

The grant gives eligible new home buyers a $25,000 handout for properties that are worth under $750,000.

Well placed to benefit

“This is in SGP’s sweet-spot,given 70-80% of its products are sold to owner-occupiers/First Home Buyers,and its properties are at the affordable end (eg Sydney house & land entry price c.A$720k),” said Morgan Stanley.

“This will be a material positive for SGP’s FY21 outlook as we transition out of COVID-19.”

The broker recently upgraded Stockland to “overweight” with a price target of $4.30 a share.

More reading

• 2 ASX REITs to buy with $1,000 today
• We’re in recession. What does that mean for investors?
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• 3 of the best ASX 200 tech shares for your watchlist
• The Kogan share price is surging higher following another positive business update

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.

The post Why Alumina and Stockland share prices could outperform in coming weeks appeared first on Motley Fool Australia.

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Will the Qantas Airways Ltd (ASX: QAN) share price and other ASX travel shares crash back to Earth?

Forgive the terrible pun, but I think it’s a question well worth asking today.

The Qantas share price has been on an absolute tear in recent weeks. Just today, the Aussie airliner’s shares are up 3.9% to $4.66, at the time of writing. This follows a ~7% gain yesterday. Since 19 March, the Qantas share price has risen nearly 130% from its low of $2.03.

Other ASX travel shares have made similar movements in recent weeks. Webjet Limited (ASX: WEB) shares are up nearly 100% since late-April. And Corporate Travel Management Ltd (ASX: CTD) shares are up more than 180% since their 19 March closing price.

So what do these extraordinary moves tell us?

Well, at their lows, I think it’s safe to say these companies were being priced for bankruptcy or something close to it which would have involved massive shareholder dilution. The market has rapidly moved away from these assumptions, particularly with the easing of coronavirus-related restrictions. Along with this, the conceptual floating of a return to travel explains the massive share price increases we have seen in recent weeks.

Even just yesterday, Qantas announced it would be increasing the availability of domestic flights over this month and next. According to the release, the new services will see Qantas’ domestic capacity increase from 5% of pre-pandemic levels to 15% by the end of this month and even possibly up to 40% by the end of July, depending on state-level restrictions.

Is it too late to buy back into Qantas and other ASX travel shares?

On one level, I think the time for making massive gains in ASX travel shares is over. Opportunistic investors who bought in near the lows we saw in March and April would be sitting on handsome profits right now. But remember, these were high-stakes gambles, in my view. We are fortunate that coronavirus has not taken hold in Australia to the same extent as other countries around the world however the situation could have easily gone the other way.

Unfortunately, I don’t see too much further upside for the ASX travel sector from here on in. Yes, domestic travel looks to be on the right track for recovery. But I believe international travel will still be off the cards for at least another year, if not longer. And that’s where Webjet, Corporate Travel and, to a lesser extent, Qantas used to derive the lion’s share of their business.

Foolish takeaway

The future is still highly uncertain for these companies in my view, so I won’t be investing in them myself – especially at current prices. Warren Buffett’s first rule of investing is ‘don’t lose money’ and I don’t think ASX travel shares can live up to this rule for investors today.

More reading

• We’re in recession. What does that mean for investors?
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher
• Qantas share price soars on plans to increase domestic flights
• ASX 200 rises 0.8%, travel shares fly higher

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

CSL Limited (ASX: CSL)

According to a note out of Citi, its analysts have retained their buy rating and $334.00 price target on this biotherapeutics company’s shares. The broker has concerns over lower plasma collections because of the pandemic. However, it appears optimistic that this could be partly offset by increasing demand for flu vaccines during the next northern hemisphere flu season. I agree with Citi on CSL and think its recent share price weakness is a buying opportunity.

Westpac Banking Corp (ASX: WBC)

A note out of UBS reveals that its analysts have upgraded this banking giant’s shares to a buy rating with a $20.50 price target. Although it acknowledges that trading conditions remain tough, the broker believes Westpac’s outlook isn’t as bleak as it looked just a few weeks ago. In addition to this, it believes a further deterioration in asset quality has reduced materially. I agree with UBS on Westpac and believe it and the rest of the big four are good options for investors right now.

Zip Co Ltd (ASX: Z1P)

Analysts at Morgans have retained their add rating and lifted the price target on this payments company’s shares to $7.00. According to the note, the broker is pleased with its decision to acquire New York-based QuadPay. It sees it as a lower risk way to enter the lucrative U.S. retail market. And while it expects the U.S. business to be loss-making over the short term, it appears to believe it is worth overlooking this to focus on its significant long term potential in the key market. While it is a high risk option due to its lofty valuation, due to its recent pullback from its high, I think it could be worth a small investment with a long term view.

More reading

• 2 ASX growth shares I’d buy before Afterpay shares
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower
• Is the Westpac share price too high?
• Why today might be a good day to buy NAB and Westpac shares

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. 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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