Australian companies, Santos Limited (AU:STO) and Brambles Limited (AU:BXB) have Strong Buy ratings from analysts.
Santos’ stock has fallen by 8.7% in the last year, while Brambles’ stock has risen by more than 40% during the same period. In terms of capital growth, Santos has a higher upside as compared to Brambles.
Both these companies also score a “Perfect 10” on the TipRanks Smart Score tool. This score indicates that both companies have high potential to surpass the market returns.
Let’s have a closer look at them.
Santos Limited
Santos Limited is a leading oil and gas producer in Australia. The company is engaged in the exploration of LPG, LNG, CSG, methane, ethane, etc.
Santos reported record profits and cash flow growth in its fiscal year 2022 earnings. The net profit after tax was up 221% to $2.1 billion, and free cash flow increased by 142% to $3.6 billion, as compared to 2021. The strong demand for its products and higher prices drove the numbers for the company.
In terms of its shareholders’ returns, the company announced a 78% increase in its final dividends, which brought the total dividend for 2022 to AU$0.22 per share.
Analysts hold their Buy rating on the stock based on the expected increase in production and higher exposure to the LNG market with high prices.
What is the Price Target of Santos?
According to TipRanks’ analyst consensus, STO stock has a Strong Buy rating. This is based on a total of 11 recommendations, out of which 10 are Buy.
The average price target is AU$9.01, which is 31% higher than the current price level. The price has a high forecast of AU$12 and a low forecast of AU$7.85.
Brambles Limited
Brambles is a logistics company that mainly serves the FMCG industry across 60 countries globally.
The company’s share price got a fresh boost after the company reported its first-half results for the fiscal year 2023. The company’s revenue increased by 7% to $2.9 billion, as compared to the same period a year ago. Underlying profits grew by 14% to $548 million, driven by pallet pricing. In terms of dividends, the company announced an interim payment of $0.123 per share, which is 14% higher than the previous year.
Analysts are favoring the stock as the company also upgraded its revenue growth to be between 12-14% for the full year. Moreover, the underlying profits are expected to grow between 15-18% in 2023. Analysts believe the pricing growth might mellow down a bit in the second half, but will remain positive for the company.
Is Brambles a Good Investment?
BXB stock has a Strong Buy rating based on eight Buy and two Hold recommendations.
The average target price is AU$14.21, which represents a growth of 6.5% on the current price level.
Conclusion
Both companies have shown huge success in their recently reported results, gaining analysts’ confidence.
Analysts have Strong Buy ratings on both STO and BXB, with higher upside potential for Santos.
