One of Australia's leading broker has released its best ideas for the month of April.
These ideas are the ones that the broker believes offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.
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What has changed this month?
The broker has added coal port operator Dalrymple Bay Infrastructure Ltd (ASX: DBI) and online listings company Frontier Digital Ventures Ltd (ASX: FDV) to its best ideas list this month.
Morgans notes that Dalrymple Bay Infrastructure offers a very generous dividend yield which is secured by contracts over the next five years.
Its analysts currently have an add rating and $2.57 price target on Dalrymple Bay Infrastructure's shares.
In respect to Frontier Digital Ventures, the broker believes it is well-placed for growth. Morgans notes that many of its businesses are facing COVID headwinds, which should ease as vaccines roll out. In addition to this, cost reductions are expected to result in operating leverage, underpinning strong earnings growth.
The broker has an add rating and $1.63 price target on Frontier Digital Ventures' shares.
They are replacing rail freight company Aurizon Holdings Ltd (ASX: AZJ) and ecommerce company Redbubble Ltd (ASX: RBL) on the list.
What else is on the list?
Also on the list are Aristocrat Leisure Limited (ASX: ALL) and Coles Group Ltd (ASX: COL), among others.
Commenting on Aristocrat, Morgans said: "There are strong product tailwinds for ALL and it is clearly excelling in the land based arena with game content outperforming peers. Digital will continue to improve as it introduces additional content into already successful titles and we believe the company is well placed in the current environment with strong demand expected for their games."
Morgans has an add rating and $37.31 price target on its shares.
In respect to Coles, it commented: "While vaccines are being rolled out across Australia, we think people will continue to spend more time at home due to the risk of COVID-19 flare-ups with the working-from-home trend also likely to stay for some time. This will be beneficial for the major supermarket operators. We continue to prefer COL (~20x FY22F PE and 4% yield) over WOW (25x FY22F PE and 3% yield) mainly due to valuation."
The broker currently has an add rating and $19.45 price target on the supermarket giant's shares.
