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Once a month, the Morgans team selects its best ideas. These are the stocks it believes offer the highest risk-adjusted returns over a 12-month period and are backed by an above-average level of confidence.
On this occasion, an overview of the favorites of the financial sector:
Morgans has this investment bank on its list of best ideas. The broker believes its shares are “relatively cheap” and appreciates “Macquarie’s exposure to long-term structural growth areas such as infrastructure and renewable energy”. However, its analysts acknowledge that the bank could “face earnings pressures from the impact of weak economic conditions” in the near term.
While it may make it onto this list, Morgans currently only has a holding rating and a price target of $200.00 on Macquarie stock.
QBE Insurance Group Ltd. (ASX: QBE)
This insurance giant has been named one of Morgans best ideas. He likes the insurance giant because of its attractive valuation and potential for margin expansion.
The broker commented: “We believe QBE is likely to have positive underlying momentum next year. QBE implemented rate increases of approximately 9%, which should contribute to margin expansion in FY22. With QBE’s balance sheet recently reset, price tailwinds are evident and the stock is trading relatively cheaply on 11x FY22F PE.
Morgans has an added rating and a price target of $14.32 on QBE shares.
Westpac Banking Corp. (ASX: WBC)
A final ASX share in the financial sector that makes the list is Westpac. It is Morgans’ “preferred big bank” with “the most compelling valuation” of the group.
Morgan added: “In terms of the quality of the overall risk profile, we think WBC is second only to CBA. From a credit risk perspective, we believe WBC is relatively defensively positioned as its loan portfolio is biased more towards Australian home loans.
The broker currently has an added rating and a price target of $29.50 on Westpac shares.