Yesterday I took a quick look at a number of unfortunate shares which brokers had just slapped sell ratings on.
Today I thought I would look at shares which have found favour with brokers and have been given buy ratings. Here they are:
McPherson's Ltd (ASX: MCP)
A research note out of Shaw and Partners yesterday revealed that its analysts have slapped a buy rating and $1.85 price target on the household and beauty products company's shares. The broker appears to believe that McPherson's is trading at a significant discount to its peers and could be rerated in the near future. While 10x trailing earnings is certainly cheap, the company does look likely to deliver a third successive year of sales declines in FY 2017. I'd prefer to invest in companies which are exhibiting strong sales growth.
Sigma Healthcare Ltd (ASX: SIG)
Credit Suisse has upgraded the pharmacy operator and supplier to an outperform rating with a 90 cents price target. According to the note the broker believes that the market has been overly negative on its legal action against Chemist Warehouse. Although it acknowledges that losing a contract with its major customer would be difficult, it sees opportunities for Sigma to reinvest freed up working capital in earnings accretive acquisitions. Although I agree with this view, I'm not convinced that Sigma's shares have found their bottom yet. This could make it one to avoid.
Wesfarmers Ltd (ASX: WES)
According to a note out of Macquarie, its analysts have reiterated their outperform rating and $45.00 price target on Wesfarmers' shares following a series of executive appointments. The broker appears confident that the new management team will ensure that the next few years are successful, delivering earnings growth and improved returns. At the current share price I think Wesfarmers is a good, but not great option for income investors.
