3 ASX shares rated as buys by brokers // Motley Fool Australia


The three ASX shares I’m going to mention in this article are rated as ‘buys’ by several brokers.

Broker recommendations give an indication where market analysts think there are buying opportunities for investors. Share prices change all the time, so sometimes a broker could think an ASX share is a buy at one price and perhaps a sell if it were significantly higher.

Investment site MarketIndex regularly collates the ratings of brokers together to assess what the broker community collectively think are opportunities. Just because several brokers think something is a buy doesn’t mean it’s guaranteed to do well, but it may reveal some insights.

With that in mind, here are three ASX shares that brokers like:

Cleanaway Waste Management Ltd (ASX: CWY)

As the name suggests, it’s a business involved with waste management. It’s actually one of the biggest in the country – your weekly bin collection may be done by Cleanaway.

Cleanaway is rated as a buy by at least five analysts. Since 3 September 2020 the Cleanaway share price has fallen by 13.5%. That peak of the share price was just after the release of its FY20 result.

In that result, the ASX share reported underlying net profit growth of 8.7% to $152.9 million with free cashflow of $230.1 million, up 11.5%. Cleanaway said that its defensive characteristics were once again demonstrated during COVID-19.

At the current Cleanaway share price, it’s trading at 20x FY23’s estimated earnings according to Commsec.

Challenger is the market leader (by market share) of annuities in Australia. An annuity is when a person gives their capital to a business like Challenger in return for a guaranteed source of income – either for a fixed term or for the rest of their life.

It’s rated as a buy by at least six analysts. The Challenger share price is down 52% since the pre-COVID-19 crash price of $10.38.

Challenger recently told investors about its performance in the first quarter of FY21. The annuity business said that its group assets under management (AUM) went up 4% for the quarter to $89 billion. ‘Life’ investment assets also went up for the quarter, benefiting from annuity sales growth of 46% compared to the prior corresponding period, total book growth of 0.8% for the quarter and positive investment returns.

The ASX share’s funds under management (FUM) went up 5% for the quarter, which included $3.6 billion of net inflows. Challenger also said that significant progress has been made deploying the life cash balance into higher yielding investments.

At the current Challenger share price it’s priced at under 11x FY22’s estimated earnings according to Commsec.

Metcash is a diversified retail business operating through a variety of brands.

Its food pillar supports over 1,600 independently owned stores including IGA and Foodland brands. In liquor it supplies independent retailers under brands like Cellarbrations, The Bottle-O, IGA Liquor, Duncan’s, Thirsty Camel and Porters Liquor.

In hardware the ASX share has operations including Mitre 10 and Home Timber & Hardware. It is also acquiring franchisor Total Tools.

It’s rated as a buy by nine analysts. Since 2 October 2020, it has risen by 13.6%.

Metcash recently held its AGM and gave a trading update as part of that. It said that food sales continue to benefit from COVID-19 effects. Total food sales in the first quarter were up 11.4% on the prior corresponding period. Excluding the loss of Drakes, total food sales excluding tobacco went up 18.4%.

In liquor, Metcash said its trading continues to perform well as restrictions lift. Sales in the first quarter of FY21 increased by 11.4%. Excluding regions impacted by trading restrictions, sales went up 23.2%.

At the current Metcash share price it’s valued at 15x FY21’s estimated earnings, according to Commsec.

Where to invest $1,000 right now

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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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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