Although investors should never rely on broker recommendations as their sole guide when it comes to making investment decisions, they can nevertheless provide a useful source of ideas for investors who are struggling to find value.
Fortunately, Bell Potter has identified three shares that it believes still offer good value, despite the strong market rally over the past few months:
BT Investment Management Ltd (ASX: BTT)
Bell Potter has increased its 12-month price target for BTIM to $14.50 following another impressive quarterly update from the fund manager. Despite facing the headwinds from Brexit, BTIM still managed to record net-flows of $2.7 billion for the March quarter, and closed the first-half with $4.6 billion in positive inflows. This should set the company up for a strong first-half result considering equity market conditions have also been quite favourable over the past six months. BT shares are currently trading at around $11 per share – a 32% discount to Bell Potter's 12-month price target.
Freedom Insurance Group Ltd (ASX: FIG)
Freedom Insurance Group is a relatively new addition to the ASX and Bell Potter has initiated coverage of the shares with a buy recommendation and 12-month price target of 94 cents. The company designs, distributes and administers insurance products without taking any of the underwriting risk. Although Freedom Insurance has already upgraded its full-year guidance twice since listing in December last year, the shares still appear to be trading on a relatively undemanding valuation. Based on Bell Potter's forecasts, the shares are currently trading on a forward price-to-earnings ratio of 13.8 and a 26% discount to its 12-month price target.
Praemium Ltd (ASX: PPS)
Bell Potter has increased its 12-month price target for Praemium to 77 cents after the fintech company delivered another solid quarterly update yesterday. Fund inflows increased by $465 million in the latest quarter and helped to boost its total funds under management to $5.7 billion – a 34% increase on the prior corresponding period. Praemium's Australian business continues to track along nicely, but Bell Potter believes the international division is set to become the company's real growth engine over the medium term thanks to the launch of new products. There is little doubt that the company has a positive growth outlook, but I feel the broker's 12-month price target might be a little too optimistic considering the shares are currently trading at just 40.5 cents.
