Investing in the stock market can often feel like navigating through a maze, especially with so many options to choose from. In such a landscape, broker recommendations can provide valuable insights. While they're not infallible, they can offer a glimpse into the sentiment of industry professionals. Recently, Morgans has highlighted four ASX stocks that they believe are currently undervalued. Let's explore why now might be the ideal time to invest in these potential gems.

1. Dalrymple Bay Infrastructure Ltd (ASX: DBI)

Dalrymple Bay Infrastructure, the long-term operator of the Dalrymple Bay Coal Terminal in Queensland, has caught the eye of Morgans. The broker was pleased with the company’s performance in the first half of 2024, especially noting its consistent EBITDA growth, which met expectations.

But what really stood out was the surprise in the cash received from an 8X expansion and a NECAP spend yet to be added to the asset base. Morgans believes that these factors could enhance the company’s value in the near term. The firm has maintained its "Add" rating on DBI shares, with a price target of $3.28. Additionally, Morgans is forecasting a dividend yield of over 7% for FY24 and FY25, making this stock a potentially attractive option for income-focused investors.

2. Stanmore Resources Ltd (ASX: SMR)

Next on Morgan's radar is Stanmore Resources, an ASX-listed mining company. Although Stanmore’s share price has taken a hit recently, down 18.8% over the past month and closing at $3.07 in the last session, Morgans remains optimistic.

Morgan's equity strategist Andrew Tang pointed out that the 4.4 US cents per share dividend in Stanmore’s 1H24 results was a positive surprise. Furthermore, the company’s reaffirmed production and adjusted cost guidance have been viewed favourably. While weak steel markets pose short-term risks, Morgans sees this as a temporary setback. They maintain a positive medium-term outlook, considering the current dip as a buying opportunity. Therefore, Morgans has reiterated its "Add" rating for Stanmore Resources.

3. Clinuvel Pharmaceuticals Limited (ASX: CUV)

Clinuvel Pharmaceuticals is a company in the healthcare sector that has had its share of challenges lately. The company’s stock price fell by 6.45% over the past month, closing at $13.79. This decline was partly due to difficulties in its Phase 3 Vitiligo study, where patient retention and recruitment have been problematic, leading to an extended recruitment timeline.

Despite these challenges, Morgans remains bullish on Clinuvel’s long-term prospects. The broker acknowledged issues such as an ineffective or absent buy-back, management changes, and poor segmental performance disclosure, yet still sees potential in the company's underlying asset, Erythropoietic Protoporphyria (EPP), a rare genetic disorder. Morgans believes that the asset will remain competition-free for several years, allowing Clinuvel to build its cash reserves and possibly expand into new indications. As a result, they have adjusted their rating to "Add."

4. Regal Partners Ltd (ASX: RPL)

Last but not least, Regal Partners, a specialist alternative investment manager, has also been recommended by Morgans. The company’s HY24 results exceeded both Morgans’ and the market’s expectations, thanks to strong growth in management fee revenue and principal investing income.

Morgans is particularly optimistic about Regal’s future earnings trajectory, driven by the continued growth of funds under management (FUM), which averaged $11.7 billion in HY24 and is expected to grow to $16.5 billion. Additionally, the broker highlighted potential cost reductions in CY24 that could further boost underlying net profit after tax (NPAT). With these positive indicators, Morgans has an "Add" rating on Regal Partners, along with a price target of $4.30.

Is Now the Time to Buy these ASX Stocks? 

Morgans’ positive ratings on these four ASX stocks suggest that now could indeed be a good time to consider adding them to your portfolio. Dalrymple Bay Infrastructure offers stability and income potential with its solid dividend yield. Stanmore Resources, despite its recent setbacks, has a promising outlook in the medium term. Clinuvel Pharmaceuticals, while facing some challenges, still holds strong long-term potential in its niche market. Regal Partners, with its impressive growth and earnings potential, could be a valuable addition for those looking to capitalise on the alternative investment sector.

As always, it’s important to do your own research and consider your investment goals and risk tolerance before making any decisions. But with Morgans highlighting these stocks as opportunities, they might be worth keeping an eye on in the coming months.