Analysts tip A2 Milk (ASX:A2M) and this share as buys

Here are two ASX shares analysts think are buys…

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Looking for investment ideas in January? Listed below are a couple of shares that are rated highly by analysts right now.

Here's what you need to know about them:

A2 Milk Company Ltd (ASX: A2M)

The team at Bell Potter believe the A2 Milk share price is in the buy zone after a horrific time in 2021. The broker believes the infant formula company has the potential to deliver very strong earnings growth in the coming years as it recovers from the pandemic.

Bell Potter has a buy rating and $7.70 price target on A2 Milk's shares. This compares very favourably to the current A2 Milk share price of $5.46.

The broker said: "We see the scope for EPS to double by FY26e, if A2M can execute on the China offline expansion strategy, while recovering 50% of the lost sales (from FY20-21) in English label IMF. The catalyst to regaining lost English label sales is likely to be boarder reopening and the return of international students. Exiting the loss making US assets or navigating a turnaround at the MVM asset would likely accelerate this turnaround. We do not see the current share price as reflecting this potential."

Treasury Wine Estates Ltd (ASX: TWE)

This wine company is rated highly by the team at Morgans. Its analysts currently have an add rating and $14.06 price target on its shares.

The broker believes its shares are trading at an attractive level and was pleased with its recent acquisition of Frank Family Vineyards. It suspects the latter could lead to its margin expanding quicker than expected.

Morgans said: "TWE has the China reallocation risk and it will take 2-3 years to recover these earnings in new markets. However once it comps China earnings, we expect TWE to deliver strong earnings growth from the 2H22 onwards. Organic growth will be supplemented by M&A. On this front, we view TWE's recent acquisition of Napa Valley luxury wine business, Frank Family Vineyards (FFV) as strategically important. This high margin business should see TWE achieve its US margin target two years earlier than planned. We see recent share price weakness as a great buying opportunity in this high quality company. The stock is currently trading at a material discount to its long term PE range."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk and Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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