With so many shares to choose from on the Australian share market, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Audinate Group Ltd (ASX: AD8)

According to a note out of UBS, its analysts have retained their buy rating but cut the price target on this media networking technology company’s shares to $7.30. The broker is a big fan of Audinate’s Dante product and believes it has a massive long term market opportunity. And while it does expect sales to soften over the coming quarters due to the pandemic, the broker believes it is well worth looking beyond this and focusing on its long term potential. I agree with UBS and feel Audinate would be a great buy and hold option for investors.

REA Group Limited (ASX: REA)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $105.00 price target on this property listings company’s shares. It was pleased with its latest quarterly update given the tough trading conditions it was facing. And while conditions in the industry continue to be tough, the broker remains positive on its long term prospects. Especially given the structural tailwinds it is benefiting from. I agree with Morgan Stanley and feel REA Group is a top blue chip to own.

Reject Shop Ltd (ASX: TRS)

Analysts at Goldman Sachs have upgraded this discount retailer’s shares to a buy rating from sell and put a price target of $4.75 on them. Goldman likes Reject Shop due to its turnaround story with a new executive team, a more robust balance sheet, and the potential for material improvements in efficiencies in labour, rent and stock turn. It also notes that its valuation is supported by a cash balance that was 28% of its market capitalisation based on its last closing price. While I’m not a big fan of Reject Shop, I think Goldman Sachs makes some very good points.

More reading

• REA Group shares are up 53% since late March. Is it too late to invest?
• The ASX 200 blue chip shares I would buy with $5,000 after the market crash
• Highlights from the week: ASX 200 rises 2.75%
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• Market close: ASX 200 ends 0.5% higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended REA Group Limited. 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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The Advance Nanotek Ltd (ASX: ANO) share price has surged 11.51% today after the company announced profits are expected to more than double. Net profit before tax for FY20 is expected to be approximately $8.4 million, 2.5 times greater than FY19 profit before tax. 

What does Advance Nanotek do?

Advance Nanotek manufactures zinc oxide, which is used in sunscreen. First formed in 1997, Advance Nanotek has been listed on the ASX since 2003. Its product range suits a wide variety of sunscreens and cosmetics, with its Zinxation recipe providing SPF50+ for broad UVA/UVB protection. Advance Nanotek has a current annual capacity of 3,000 tonnes, and is investing to increase capacity beyond 5,000 tonnes. 

Advance Nanotek’s business

Around 70% of Advance Nanotek’s sales are in the US. The company’s production facilities were temporarily closed in the US but have now reopened with sunscreen manufacturing recommenced, albeit at smaller volumes. Advance Nanotek expects US sales volumes to return to normal and has established stockpiles in a logistics facility to take advantage of the expected upturn in conditions. 

The board is looking to expand Advance Nanotek’s aluminium oxide business into new markets and improve supply to existing customers by raising capacity. Stock will be made available at an EU logistics facility, with sales from the aluminium oxide product in FY20 expected to be ~$2 million. 

Financial results

Advance Nanotek recorded sales revenue of $11.3 million in 1HFY20, up from $4.7 million in 1HFY19. Net profit before tax for the half was $4.81 million, nearly 3 times greater than the prior corresponding period. Earnings per share increased to 5.71 cents up from 3.03 cents in 1HFY19. 

The company ended the half with cash and cash equivalents of $304,964 and borrowings of $1.1 million. Strong sales continued into the second half with profit before tax of $1.3 million in January. FY20 anticipated turnover is up 46% on FY19 to $18 million. 

Outlook

US sales increased 280% for the 7 months to 31 January over the prior corresponding period. Some negative impact from coronavirus has been experienced with US citizens cancelling or delaying travel plans for the summer. This may have a modest negative impact on Advance Nanotek’s $30 million FY20 sales target. 

Nonetheless, Advance Nanotek has seen impressive increases in profit over the last few years. Profit before tax increased from $0.56 million in the 5 months to November 2017 to $3.831 million in the 5 months to November 2019. Full year FY20 net profit is estimated to be $8.4 million. 

More reading

• Why Advance Nanotek, Macquarie, Tyro, & Zip Co shares are charging higher

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Advance NanoTek Limited. 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 ASX stock of the day: This ASX materials share jumped 11% today on a 250% surge in profits appeared first on Motley Fool Australia.

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