Once again brokers across the country have been busy running the ruler over a number of shares on the ASX.
Amongst the many upgrades and downgrades released today, two in particular have stood out. Here's why these two shares have been upgraded:
Northern Star Resources Ltd (ASX: NST)
This leading gold producer has been upgraded from an equal-weight rating to overweight with a $5.30 price target by Morgan Stanley this morning. The investment bank's research note reveals that its analysts believe that even though the gold price has weakened, Northern Star remains undervalued at the current share price.
If I felt confident that the gold price would at least remain at the current level I would definitely consider an investment in the miner. With zero debt and a strong cash balance, Northern Star is among the more attractive options available to investors in the industry. Unfortunately I expect rising rates in the U.S. to drag the gold price significantly lower this year.
Transurban Group (ASX: TCL)
According to a research note out of Morgans, the toll road giant has seen its shares upgraded from a hold rating to an add with an $11.23 price target. Whilst I think Transurban's near-monopoly business makes it one of the best shares to own on the ASX, I'm not willing to start an investment at the current share price.
At present Transurban's shares are changing hands at the whopping premium of 92x trailing earnings, I think this is a little too excessive and would suggest investors wait in hope for a sizeable pull back in its share price before investing. As we have seen with Aconex Ltd (ASX: ACX) today, shares that trade on extremely high multiples can come crashing down to earth with a bang if their growth fails to live up to expectations.
