Professional share market analysts have an interesting job; they spend all day analysing financial data, collating sales information, and investigating the themes that are likely to shape the investing landscape over the short, medium, and long terms.
They spend their days talking, researching and living the share market and therefore have an insight into company quality and future performance that average investors don't have time to acquire.
I attempt to keep abreast of the latest broker recommendations as a method of either validating my own research or identifying companies that are a little out of favour and present as a turnaround opportunity.
Here are two companies that are loved by analysts, and one that our own Motley Fool team thinks is even better!
Toll road owner and operator Transurban Group (ASX: TCL) is a favourite among analysts due to its collection of high quality assets in Australia and the US. The company reported a 64% jump in profit in the 2013-14 financial year and recently purchased two toll roads in Brisbane. CIMB Securities recently performed a review of Transurban's future capital requirements and concluded that the company shouldn't have any trouble with funding. CIMB rates the company as an ADD (equivalently of BUY).
A similarly asset-rich company is Nextdc Ltd (ASX: NXT), one of Australia's few independent data centre operators. Data centres are known to generate exceptional free cashflow when operating near capacity and NextDC is quickly approaching that point. UBS recently reviewed the outlook for the company and noted that NextDC, as one of Australia's largest independent data centres, stands to benefit from its good reputation and local company bias to deliver above-average returns. While still loss-making, UBS believes the company is a solid BUY.
Next DC has been popular among small-cap analysts and tech investors due to its exposure to both the growing infrastructure requirements of cloud-based applications and increased adoption of cloud-based services by individuals and businesses.
Another company set to benefit from this trend is an up-and-coming tech company that has seen exponential growth in its main markets.
