I like to keep a close eye on ASX shares that brokers are giving buy ratings to and the reasons behind their bullish attitudes for those views.
Here are 3 ASX shares the experts are tagging as outperformers in the coming months.
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City Chic Collective Ltd (ASX: CCX)
Leading broker Macquarie has placed a price target of $4.21 on the fashion retailer, which would provide prospective investors with approximately a 25% return at the current price of $3.37.
Macquarie analysts are enthused by its recent capital raising of $90 million to support its balance sheet and the room to manoeuvre for further growth this capital will provide. The additional liquidity will be utilised to finance the acquisition of the eCommerce assets from Catherines from the Ascena Retail Group.
Citch Chic sagged as low as 79 cents per share when it bottomed out in March due to COVID-19, but has surged as of late due to impressive (unaudited) FY20 revenue growth of 31%.
Despite these recent successes, Macquarie remains wary of extended lockdowns in Victoria and the inevitable store closures this will cause. On the flipside, JobKeeper's extension is believed to soften the financial blow for City Chic in the meantime.
Alliance Aviation Serviced Ltd (ASX: AQZ)
Credit Suisse rates this ASX share as one set to outperform, placing a target price of $4.05 on the flight charter company. This represents a current upside of 12.5% on Alliance's share price of $3.60 at the time of writing.
The broker sees the current market for fly-in-fly-out (FIFO) workers as strong due to the continuation of commodities operations, and Alliance's exposure to chartering flights for the resources industry acts as a major tailwind for its profitability prospects in FY21.
Yesterday Alliance revealed to the market that it had achieved an 18.9% increase in net profits and close to an 8% gain in total revenues for FY20, largely aided by the diversity of its business operations.
Although it has cut its final dividend for FY20 due to the pandemic, Credit Suisse anticipates shareholders will receive a 2.5% yield in FY21 and remains optimistic the airline will continue to exceed market expectations in the coming 12 months.
Aristocrat Leisure Limited (ASX: ALL)
Fresh analysis from brokers at Citi has categorised the gaming and leisure company in the buy zone.
Citi has upheld its price target on Aristocrat of $30.10, representing a difference of approximately 10% from its current share price of $27.37 at the time of writing.
In May, it was announced that Aristocrat's operating revenue for the first half of FY20 had increased by 7% compared to FY19, despite net profit after tax decreasing by as much as 14%, year on year.
In its current forecast for FY21, Citi expects Aristocrat to pay a dividend of 35 cents, equating to a yield of 1.3%, as well as earnings per share of $1.05.
