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We’re almost at the end of reporting season, so it’s time to think about which ASX stocks might have the best prospects after the flurry of numbers.
Morgans analyst Andrew Tang looked at the company’s results and nominated six ASX stocks as his “best calls to action”:
An essential holding for long-term investors
Tang liked the “rebound” in the second half of ASX’s holding in Wesfarmers.
“We continue to see Wesfarmers as a core portfolio for long-term investors,” he said on the Morgans blog.
“Kmart Group’s earnings rebounded strongly in the second half of 2022 after being hit hard by the lockdowns in the first half of 2022.”
In fact, the latest dividend exceeded all expectations.
“The FY22 dividend per share of 180 cents was above our forecast of 164.8 cents per share and the Bloomberg consensus (169.5 cps),” Tang said.
“Group return on equity increased 330 basis points to 29.4%.”
The acquisition story is not over yet.
Despite the KKR consortium’s takeover bid failing last week, the Morgans team now rates Ramsay Health as a buyout.
“Despite persistent volatility and FY24 being a ‘normal’ business year, it takes a backseat to KKR’s now revised offering, which we think is likely to be increased somewhat,” Tang said.
“We have adjusted our FY23-24 earnings, widened our valuation multiples and maintained a premium to go.”
Meanwhile, Peter Warren enjoys an industry-wide sweet spot.
“The imbalance between supply and demand continues to generate strong margin results for the sector,” Tang said.
“Industry consolidation will continue – we expect Peter Warren to be an entrant (main driver of growth) or even a potential target in time.”
The share price remains low, the Morgans team believes.
“Peter Warren trades at ~7x FY23 PE and ~10x our assumed ‘most normalized’ conditions (FY24/25).”
Growth marathon for these two ASX stocks
Lottery resellers Jumbo Interactive reported a year of “solid growth,” according to Tang.
“The business continued to diversify its profit base, with SaaS now accounting for almost half of the group’s EBITDA,” he said.
“We expect Jumbo Interactive to continue to achieve steady growth in the years to come through a combination of organic contract awards, mergers and acquisitions and diversification.”
Tang has a positive outlook on clothing retailer Universal Store.
“We believe Universal will deliver double-digit sales and earnings growth in FY23 as an expanded store network plays on the resilience of demand for fashion apparel from a cohort of young customers experiencing high levels of employment. , higher salaries and more and more opportunities to go. go out and socialize.”
As such, Universal’s stock price is too cheap to resist at the moment.
“The FY24F P/E is 10x, which we believe is too low for a business with Universal’s quality and growth potential.”