Next week sees the ASX head once again into February reporting season. Most listed companies operate with a June financial year end, this means the month of February is time to report their half yearly financial progress.
It's gonna be busy!
Reporting season is always an exciting time for investors. This year will be no different with many stocks trading on high multiples, implying that the market has high expectations for growth.
Likewise there are a number of stocks – particularly in the consumer discretionary, resources, energy and mining services sector – that have been hit hard and are trading on low multiples with investor expectations also very low.
Earnings surprises lead to opportunities
Investors spend a great deal of time trying to forecast companies' future earnings. At reporting season these forecasts get put to the test with the release of official results. Sometimes investors get their forecasts close to spot on, however at other times they don't!
It's the times when they don't get their forecasts close to the mark that you are most likely to see a significant movement in the share price once a company reports.
Here are three stocks, which according to research by one leading investment bank, may surprise investors.
- Harvey Norman Holdings Limited (ASX: HVN) – Momentum is building for the retailer, which could come in ahead of expectations.
- Caltex Australia Limited (ASX: CTX) – The dramatic fall in the price of oil might have benefitted this leading petrol retailer by more than investors are currently giving the company credit for.
- SEEK Limited (ASX: SEK) – Shareholders in SEEK could be set to receive a higher than expected dividend with research suggesting that the board may raise the pay-out ratio thanks to strong momentum across the group.
