These are the latest ASX shares to be upgraded by brokers to buy

There are still bargains to be found even after the S&P/ASX 200 Index (Index:^AXJO) may have jumped by more than 20% since hitting the bear market low.

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The S&P/ASX 200 Index (Index:^AXJO) may have jumped by more than 20% since hitting the bear market low in March, but there are still value buys to be had.

Speculation that the federal government has another $60 billion to use as stimulus due to its forecasting bungle is triggering excitement.

It was originally thought that the Morrison government's JobKeeper program would cost $130 billion proved to be well off the mark – but in a good way.

The extra support for our economy could keep our market well supported as we head into the new financial year, and it isn't too late to buy these ASX shares as brokers have only just upgraded them to "buy".

Good connection

The latest stock to be upgraded by Morgans is the TPG Telecom Ltd (ASX: TPM) share price as the broker mulled over its looming merger with Vodafone Australia.

"On a stand-alone basis and in constant accounting terms, EBITDA [earnings before interest, tax, depreciation and amortisation] for both TPM and Vodafone is in decline," said Morgans.

"So, this merger is all about the economies of scale required to have a profitable and free cash generative #3 player."

Upside from synergies

It's worth noting that David Teoh, who will be the chairman of the merged entity, has a strong track record of achieving cost savings.

"We see the largest area of cost saving as TPM using mobile to partially bypass the NBN," added Morgans.

"Without mobile, TPM would pay ~$1bn pa to the NBN, so the ability to bypass some of this using wireless technologies will likely save $150m pa in the medium term."

While the broker is forced to guess what the capex requirement is for the group, Morgans believes the new entity will be able to generate around $800 million a year in free cash flow.

Morgans lifted its rating on the stock to "add" from "hold" with a price target of $9.14 a share.

The stock to bank on

Meanwhile, the National Australia Bank Ltd. (ASX: NAB) share price got a boost after Bell Potter upgraded the stock to "buy" from "hold".

The stock had been under pressure due to its larger exposure to small and medium business lending. Many of these businesses are expected to fold due to the COVID-19 shutdown.

But despite the risks, the stock is now looking too cheap to ignore, according to Bell Potter.

Risks are priced in

"Looking past the COVID-19 noise, NAB exhibited good operational resilience in 1H20," said the broker.

"Business and Private Banking cash earnings were stable due to solid lending volumes, steady NIM [net interest margin], cost discipline, better impairment outcomes and higher asset productivity."

Bell Potter was also impressed with management's cost discipline as underlying expenses were flat at $4.1 billion with NAB forecasting around $1 billion in extra savings by the end of this financial year.

Bell Potter lifted its price target on the stock to $17.30 from $17 a share.

Motley Fool contributor Brendon Lau owns shares of National Australia Bank Limited and TPG Telecom Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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