Stock Pick

  • Leading broker tips REA Group shares as a buy

    Financial data graph

    The REA Group Limited (ASX: REA) share price has been a strong performer over the last seven weeks.

    Since dropping to a 52-week low of $62.05 around seven weeks ago, the property listings company’s shares have zoomed approximately 45% higher.

    Is it too late to invest?

    While REA Group is far from the bargain buy that it was in March, I still see a lot of value in its shares at the current level for long term-focused investors.

    I continue to be very impressed with the resilience of its business and the way it can generate earnings growth during very tough trading conditions.

    For example, last week REA Group released its third quarter update and revealed a 1% increase in revenue to $199.8 million and an 8% lift in quarterly EBITDA to $119.6 million. This was despite it dealing with a 7% decline in national residential listings during the three months.

    And while things are going to be tougher in the current quarter, the company is attempting to offset this with a 20% reduction in operating costs.

    Overall, when trading conditions improve, and they will, I believe REA Group will be well-positioned to accelerate its growth again.

    Goldman Sachs rates REA Group as a buy.

    One broker which agrees that REA Group is a buy is Goldman Sachs. This morning it retained its buy rating and lifted its price target to $107.00. This implies potential upside of approximately 18% over the next 12 months.

    It lifted its price target after upgrading its earnings forecasts for the company.

    The broker explained: “Given our increased confidence on the outlook for property listings in Australia, given April numbers that were well ahead of our expectations, and a relaxation of auction/open home restrictions in parts of Australia, we see less risk around our listings forecasts.”

    Goldman is forecasting listings growth of 12% in FY 2021 and then 8% in FY 2022.

    “As a result, we revise higher the multiple we ascribe to REA Australia and Domain Digital assets by 1X, with REA increasing to 25X and DHG to 19X.”

    REA Group remains it preferred option in the space. It has held firm with its neutral rating for Domain Holdings Australia Ltd (ASX: DHG) and has a $2.70 price target on its shares.

    Domain may have a neutral rating, but these five top stocks have buy ratings along with REA Group. They look dirt cheap after the market crash.

    5 cheap stocks that could be the biggest winners of the stock market crash

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    Returns as of 7/4/2020

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

    The post Leading broker tips REA Group shares as a buy appeared first on Motley Fool Australia.

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  • 3 top ASX 200 shares you can buy on sale today

    It’s been a rollercoaster start to the year for most ASX shares. Concerns over the coronavirus shutdown smashed the S&P/ASX 200 Index (ASX: XJO), which slumped as low as 4,456 points on 23 March.

    However, the recent bear market has created a lot of buying opportunities. Here are just a few ASX 200 shares I think could be on sale at bargain prices today.

    3 ASX 200 shares on sale today

    Webjet Limited (ASX: WEB) is one of the obvious candidates on sale today. Webjet shares have been smashed in 2020 and are down 65.71% this year at the time of writing. 

    The reality is that things have changed dramatically since the start of the year. And the outlook for the travel sector has also changed for at least the next 12 to 18 months. This means Webjet shares should rightly be valued lower in the wake of the COVID-19 shutdown.

    However, I think the ASX travel share has been oversold and could be in the buy zone. Even if it’s just domestic travel or across the ditch, we could see more bookings as restrictions ease and Australia’s economy starts to open back up.

    Stockland Corporation Ltd (ASX: SGP) is another ASX share that has been smashed in 2020. Stockland owns and operates shopping centres around Australia and therefore has a large exposure to the Aussie retail sector.

    Aussie retailers were struggling even before COVID-19 took hold. However, things looked even bleaker in the wake of the pandemic. Stockland shares have fallen 41.13% lower this year (at the time of writing) but things are starting to look up, in my opinion. Restrictions are starting to be wound back and we could see sales bounce back quicker than expected.

    Westpac Banking Corp (ASX: WBC) could also be an undervalued ASX bank share. I think there could be some short-term pain for the Aussie banks in 2020 but the longer-term outlook could be OK. At the time of writing, the Westpac share price is down 37.14% in 2020 and now could be a good time to buy for a sale price and hold for decades to come.

    If you’re looking for undervalued shares to buy, don’t miss this top ASX share pick today!

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

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    Returns as of 6/5/2020

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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.

    The post 3 top ASX 200 shares you can buy on sale today appeared first on Motley Fool Australia.

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  • Datadog (DDOG) Is a Winner, but the Stock Is Fairly Valued Here, Says 5-Star Analyst

    Datadog (DDOG) Is a Winner, but the Stock Is Fairly Valued Here, Says 5-Star AnalystFate is a cruel mistress, the saying goes. But how about turning the phrase on its head? Might fate be a welcoming friend, too? That’s certainly the case during COVID-19. As some companies’ unfortunate line of business has dictated a struggle to make it through the pandemic, some are inherently well set up to benefit.Cloud based services and data focused companies, for example. Or specifically, Datadog (DDOG). The SaaS data analytics specilaist’s performance has been impressive. Since the turn of year, DDOG shares have appreciated by 82%, whilst successfully navigating through the pandemic storm. And unlike many companies struggling with recent Q1 reports, DDOG just delivered the goods. So, where has it all gone right for DDOG?As befits a data crunching platform, it’s all in the numbers. In the first quarter, the company reported revenue of $131.25 million, up by 87.4% year-over-year and easily beating the Street's call for $117.7 million. Q1 Non-GAAP EPS of $0.06 came ahead of the estimates by $0.07, turning a profit against expectations.Bucking the trend to shy away from guidance, in Q2, DDOG expects revenue to come in between $134 to $136 million (consensus calls for $126.31 million) and for FY20 , the company projects revenue in the range of $555 to $565 million, again ahead of consensus, which calls for $534.50 million.Even though they've yet to encounter any pressure, anticipating COVID-19 headwinds, management is preparing for some 2Q/3Q retention rate pressure and deal slippage.Oppenheimer analyst Ittai Kidron expressed great satisfaction with the results and steady execution, and said, “Even with management budgeting for some 2Q/3Q COVID-19 pressure on retention rate/churn, they were still comfortable raising CY20 guidance given the robustness of the existing deal pipeline. Management's also doubling down on aggressive investment, positioning for long-term gains.”Despite the strong report, though, Kidron argues the upside is “fairly reflected in Datadog's premium valuation.” However, the 5-star analyst believes “investors with longer investment horizons (+18 months) can buy into the story.” Accordingly, Kidron keeps his Perform (i.e. Hold) rating as is, though has not set a price target. Kidron is one of the top analysts on Wall Street covering technology. His picks average a 32% one-year return, and he's ranked in the top 10 out of over 6,500 analysts, according to TipRanks database.When evaluating DDOG’s prospects, the Street is almost split down the middle. 7 Buys and 6 Holds add up to a Moderate Buy consensus rating. However, the company’s on-going share appreciation means the current average price target of $61.50, implies downside of 11%.Read more: * 3 “Strong Buy” Dividend Stocks That Look Great After Earnings Beat * 2 Cruise Line Stocks to Bet on After the Coronavirus Crisis (And 1 to Avoid) * 3 Stocks Needham’s Top Analysts Are Raving About

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