Brokers are still finding stocks to upgrade on the ASX even as the S&P/ASX 200 Index (Index:^AXJO) reattempts to break above 6,000.
That level is a psychologically important mark for the ASX, and if successful, will be a bullish development for our market.
The ASX 200 jumped 1% in morning trade to 5,998 points as investors brushed aside their COVID-19 fears and focused on the big jump in retail sales for May.
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Shopping for a good buy
This positive sentiment partially explains the 6.3% jump in the Premier Investments Limited (ASX: PMV) share price to $17.35 at the time of writing.
The other reason why the stationery and clothing retailer is outperforming is because Macquarie Group Ltd (ASX: MQG) upgraded the stock.
The broker changed its recommendation on Premier to "outperform" from "neutral" with a $20.11 price target.
The bullish turn comes on the back of the surge in online sales across the sector due to the coronavirus lockdown.
"Online trends within PMV's portfolio highlight strength within the key brands despite the recent setback of physical store shutdowns," said Macquarie.
The group's cost base is also likely to fall, which will pad margins. Premier is pushing shopping mall landlords to cut rents and is eligible for wage subsidies in Australia and some of the other countries it operates in.
However, as Macquarie highlights, quantifying wage subsidies, like JobKeeper, is difficult. There is also a risk that Premier's aggressive move to force rental cuts can backfire.
Seeking a bargain
Another stock that's outperforming today is the SEEK Limited (ASX: SEK) share price, which rallied 4.5% to $21.74 at the time of writing.
The jump comes as UBS upgraded the online jobs classifieds group to "buy" from "neutral" today and upped its price target to $23 from $15.25 a share.
There are four driving the broker's decision. First, UBS thinks the worst for the jobs market is over with its weekly trackers showing sustained improvement in job volumes.
Next, Seek is recommencing its dynamic pricing for recruiters and corporates from next month, which could see yield growth reaccelerate.
Further, the broker thinks the group's recent temporary cuts to operating costs could be in place for the longer-term.
Finally, UBS economists have revised up their forecast peak in Australian unemployment to 8% from 10%.
There is also an additional factor why investors should buy the stock. Seek's valuation stands favourably when compared to peers like REA Group Limited (ASX: REA) and Carsales.Com Ltd (ASX: CAR).
