Once a month, the team at Morgans picks out its best ASX share ideas.
These are the ASX shares that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe. They are also supported by a higher-than-average level of confidence.
Among its best ideas for the month of October are the two ASX 200 shares listed below. Here's what the broker is saying about them:
Pilbara Minerals Ltd (ASX: PLS)
The first ASX 200 share that Morgans rates as a best idea is lithium miner Pilbara Minerals. Its analysts like the company due to its very positive growth profile and strong cash generation. The broker highlights that the latter provides potential for special dividends and buybacks. It explains:
We rate PLS as our best pick of the pure-play lithium stocks. It is well funded, has a long resource life and is an established Australian operator with multiple growth options ahead of it. We think FY24's starting cash balance of over $3.3bn combined with strong operating cashflow will allow the company to pursue a meaningful capital management program while simultaneously funding growth. Updates on the company's downstream growth strategy are expected later this half which will guide towards the potential scope of special dividends and / or buy backs.
Morgans has an add rating and a $5.60 price target on the company's shares.
ResMed Inc (ASX: RMD)
Morgans also believes that investors should be taking advantage of a sharp pullback in the ResMed share price following concerns about the emergence of obesity drugs such as ozempic. It commented:
While weight loss drugs have grabbed headlines and investor attention, we see these products having little impact on the large, underserved sleep disorder breathing market, and do not view them as category killers. Although quarters are likely to remain volatile, nothing changes our view that the company remains well placed and uniquely positioned as it builds a patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.
Morgans has an add rating and a $36.95 price target on the ASX 200 share.
