Broker names 2 ASX shares to buy now

A top broker says these ASX shares are buys…

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If you're looking to take advantage of recent market weakness by making some new investments, then you may want to take a look at the two ASX shares listed below that Morgans rates as buys.

Here's why the broker is bullish on these ASX shares:

IDP Education Ltd (ASX: IEL)

The first ASX share that Morgans is bullish on is language testing and student placement company IDP Education.

Morgans was impressed with the company's performance in FY 2022, highlighting that its net profit doubled thanks to "a combination of recovery, growth and the BC IELTs acquisition."

The broker remains confident that the company's growth can continue in the coming years thanks to strong underlying system demand. As a result, it has an add rating and $31.10 price target on the company's shares. It explained:

Upside to our valuation has reduced, however we view the long-term growth profile (strong underlying system demand; capturing market share via technology-led differentiation in SP; acquisition potential) as attractive. Add maintained. Medium-term (FY24+), execution of IEL's technology driven industry change is required to meet expectations. However, we also see potential for acquisitions which aren't factored in (SP footprint; digital leads; and IELTs consolidation).

South32 Ltd (ASX: S32)

Another ASX share the broker rates highly right now is mining giant South32.

While the broker acknowledges that the company's costs have risen materially, this couldn't stop it from delivering margin growth.

And with its outlook looking very positive, the broker has maintained its add rating with a $5.50 price target. Morgans feels the market is valuing the company incorrectly. It explained:

Despite material increases in unit costs, S32 still reported operating margin growth across all segments (ex-Cannington). Earnings multiples are regularly inconsistent value indicators in resources, but in S32's case we believe it shows the market is misjudging how much residual earnings power will remain in the business post cycle peak. Boasting strong cash flow, dividend profile and balance sheet. We maintain an Add rating with a $5.50 target price.

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 positions in and has recommended Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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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