Morgans names its best ASX share ideas for October

Which stocks is the broker feeling bullish on this month? Let's find out.

| More on:
A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Every month, analysts at Morgans pick out their best ASX share ideas.

These are the ASX stocks that the broker thinks offer investors the highest risk-adjusted returns over a 12-month timeframe. Morgans also highlights that they are supported by a higher-than-average level of confidence.

Among its best ideas for October are the two ASX shares listed below. Here's what the broker is saying about these top stocks this month:

MA Financial Group Ltd (ASX: MAF)

The first ASX share that has been given the thumbs up by the broker is MA Financial.

It is a diversified financial services company that specialises in managing alternative assets, lending, corporate advisory, and equities. Morgans notes that it has a strong focus on growth.

The broker feels that its valuation is still reasonable despite rising strongly since early August. Particularly given its belief that its earnings are at a cyclical low and could improve markedly in the near future. It said:

Despite some recent share price strength MAF is still on 15.0x 12mf PE. Importantly, we believe that earnings number is a cyclically depressed number given the weakness in transactional business. The key drivers here being: an expected higher revenue margin and the benefit of recent flows in Asset Management, a halving of investment spend, MA Money becoming earnings break-even, and an uplift in corporate advisory.

Management noted that MA Money remains on track to achieve break-even profitability by October, and the company is about hitting its A$4bn loan book target by FY26. While all this has been going on, the company has built up an impressive and more recurring funds management and lending businesses.

Lottery Corporation Ltd (ASX: TLC)

Another ASX share that Morgans has on its best ideas list is Lottery Corporation. It is the company behind lotteries such as Powerball and Keno, as well as online lottery platform, The Lott.

The broker highlights Lottery Corporation's strong free cash flow generation, attractive valuation, and stable business model as reasons to be positive. It said:

TLC's FY24 result was impressive, driven by a favourable year for Lotteries and strong active customer growth. Despite lapping a record period of growth in Lotteries, we remain positive on the stock as current lottery volumes continue to perform well. The company mentioned that Saturday Lotto will be the next game to receive an update, which should benefit the base game divisions significantly and likely come with a price increase, offsetting some recent softness.

Additionally, TLC reported a leverage ratio of 2.5x, below the guided range of 3-4x, and has expressed interest in renewing the VIC licence. Based on our estimates, TLC is set to deliver a 4.5% FCF yield and a 4% dividend yield in FY25. The stock trades in line with its historical valuation ranges and we view it as a solid option for investors seeking stability.

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 Lottery. The Motley Fool Australia has recommended Lottery and Ma Financial Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Share Market News

ASX shares in April: 8 key takeaways according to Macquarie

Here are eight key takeaways from April, according to a new note from the broker.

Read more »

A shocked man holding some documents in the living room.
Broker Notes

Macquarie's take on Judo Capital shares after suddenly falling 19% yesterday?

Judo Bank was the ASX's top-performing banking stock in 2024.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Broker Notes

5 top ASX stocks to buy in May

These stocks could be quality picks for investors this month according to analysts.

Read more »

Person pressing the sell button on a smartphone.
Broker Notes

Sell alert! 3 ASX shares the brokers are calling time on

Brokers say it's time to hit the sell button on these ASX shares.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

What is next for ASX 200 shares after last month's upheaval?

Macquarie reveals its outlook for ASX 200 shares in May in a new research note published today.

Read more »

Happy young couple saving money in piggy bank.
Broker Notes

Invest $500 in these top ASX shares in May

Analysts think these shares could be in the buy zone for the month ahead.

Read more »

Person pointing finger on on an increasing graph which represents a rising share price.
Broker Notes

These ASX 200 shares could rise 30% to 40%

Let's see what analysts are saying about these buy-rated shares.

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »