Earnings season can definitely throw up its fair share of surprises and it can often make sense to wait until a company reports before buying its shares.
This is especially the case for shares that the market has shown little confidence in, or has alternatively priced-to-perfection.
While you may miss out on the occasional upside surprise, this simple risk management strategy can also protect you from some very nasty surprises.
With that in mind, here are six shares that I think investors should hold back from buying until they report later this month:
a2 Milk Company Ltd (Australia) (ASX: A2M)
I expect a2 Milk to report a strong result, but I think investors should wait until management provides detailed commentary regarding current trading conditions. While the Bellamy's Australia Ltd (ASX: BAL) saga has had little impact on them so far, it nevertheless highlights a risk to the sector moving forward.
Baby Bunting Group Ltd (ASX: BBN)
Shares of Baby Bunting have retraced from their highs over recent months after the company said it expects same-store-sales growth to start to moderate. Nonetheless, the shares are still being priced for very strong growth and investors will be expecting the baby retailer's earnings to come in at the top end of its guidance.
Blackmores Limited (ASX: BKL)
Blackmores' first quarter results were disappointing but the company did guide for improved sales momentum as the year progresses. If the vitamin maker fails to deliver a significant improvement in sales across the second quarter, I expect the shares to come under some serious selling pressure.
Star Entertainment Group Ltd (ASX: SGR)
The key issue facing Star Entertainment at the moment is the uncertainty surrounding VIP revenues following the Chinese investigation into Crown Resorts Ltd (ASX: CWN). At its AGM last October, the company itself did not know how it would impact the business and this means investors are probably best to sit on the sidelines until the company reports next Thursday.
Mantra Group Ltd (ASX: MTR)
Mantra reports its earnings next Friday, and while it is one of my favourite shares for exposure to the tourism thematic, I think the smart option for investors is to wait until the company reports before buying any shares. The market remains sceptical about its growth ambitions and any disappointment from the accommodation provider will see another round of share price falls.
Sirtex Medical Limited (ASX: SRX)
Sirtex remains a high risk proposition in my mind, despite its shares already crashing in half over the past two months. The company could still disappoint the market if it reveals sales growth has slowed further and that operating costs have continued to balloon higher. As a result, I feel the better option for investors now is to wait until the company reports and outlines a clearer outlook for the remainder of the year.
