With finance and mining dominating the S&P/ASX 200 Index (ASX: XJO), agriculture and related sectors hardly get a look in from investors.
But UBS Group AG (SWX: UBSG) just named a couple of such ASX shares among its "best ideas".
Market Matters portfolio manager James Gerrish agree with UBS' picks, so let's take a look at why he rates them as buys at the moment:
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You must be nuts to ignore this stock
Falling almond prices have punished the Select Harvests Limited (ASX: SHV) share price, to the tune of a 33% drop since September 2021.
The shares went into the Easter long weekend at $5.96.
Gerrish likes the risk-reward balance for the stock if you can pick it up for less than $6.
"As we know, agriculture is a very cyclical game, and low prices tend to work themselves out," he said in his newsletter.
"Major almond growing regions in California are now in the grips of a tough drought, and while global supply chains remain an issue, improvement here would be a positive catalyst."
UBS and Gerrish aren't the only ones bullish on the almond grower.
According to CMC Markets, all four analysts surveyed rated Select Harvests shares as a "strong buy".
You must be drunk to ignore this stock
What a crazy couple of years Treasury Wine Estates Ltd (ASX: TWE) has had.
Just as the share price was recovering from the March 2020 COVID-19 market crash, it was hit by a negative force beyond its control.
Australia challenged China to allow an independent study on the pandemic's origins, and China retaliated with punitive trade tariffs.
It brought local businesses that export to the biggest market in the world to their knees.
Gerrish remembers it well.
"Treasury Wines has had its challenges over the past few years, largely a result of its reliance on the Chinese market that saw the company caught up in a diplomatic spat that quickly whipped ~60% off its share price."
The company has since sought to diversify its geography, and the latest reporting season showed this was successful.
"In February, they reported improved trends, particularly in America — while their high margin, premium brand business did particularly well," said Gerrish.
"Since then, the market has lost some interest. However, we think Treasury Wines will emerge from a difficult period with a stronger business overall that will enjoy better returns as the world gradually gets back to normal."
The Treasury share price is now just 13% down from its pre-China crisis high.
It went into the Easter weekend at $11.10.
Gerrish likes it as a buy at around the $11 mark.
"While it doesn't 'scream value' on an estimated P/E of 24x, earnings have been depressed and [year-on-year] growth from this new base of 20% is very achievable."
