With interest rates potentially rising very soon (maybe even later today), it’s a confusing time to buy ASX shares.
Sure, mining shares have carried the S&P/ASX 200 Index (ASX: XJO) this year.
But what if you think they are now fully priced and it’s too late to buy in?
Here are a couple of non-mining buy ideas to consider from Morgans investment advisor Jabin Hallihan.
‘Positive momentum’ with ‘undemanding price/earnings multiple’
Challenger Ltd (ASX: CGF) shares have rewarded investors handsomely in 2022, with the share price up 6.6% while paying a dividend yield of more than 3%.
But Hallihan reckons it’s not too late to join the party.
“This financial services firm is enjoying positive momentum and its outlook is bright,” he told The Bull.
“Recent robust sales growth in the Life business is encouraging.”
Challenger’s earnings trajectory has improved this year, and the share price is still cheap by Hallihan’s standards.
“Challenger is trading on an undemanding price/earnings multiple and we retain our add recommendation and $7.74 price target at April 28.”
Since that price target was set, the share price has already rallied from $6.84 to $7.34 on Monday morning.
According to CMC Markets, eight out of 14 analysts consider Challenger shares a “hold”.
‘Investors should be rewarded’
Hallihan has previously spruiked Silk Logistics Holdings Ltd (ASX: SLH) shares as a buy, and his view has not changed.
“The company continues to deliver growth across all key metrics,” he said.
“We believe if Silk Logistics converts potential into proven earnings growth, then investors should be rewarded.”
The team at Morgans has set a $3.25 price target, which is a juicy 33% premium on the price on Monday morning.
The recent financial performance impressed Hallihan.
“This integrated logistics provider generated revenue of $182.5 million in the 2022 first half, an 18.5% increase on the prior corresponding period,” he said.
“Full year guidance has been subsequently upgraded by 6% to 20%.”
Hallihan’s colleague, senior analyst Nathan Lead, also recommended the company, saying Silk shares are “too cheap” considering “potential double-digit earnings growth and growth options”.
“Potential 45% total 12-month return,” he said in a Morgans memo.
Coverage is sparse on Silk Logistics but, according to CMC Markets, Shaw and Partners also rates the stock as a “strong buy”.
The Silk Logistics share price is up in excess of 13% so far this year.
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