There are two S&P/ASX 200 (Index:^AXJO) (ASX:XJO) stocks that could be set to run higher next week – at least that's what I am counting on.
The two are the James Hardie Industries plc (ASX: JHX) share price and Aristocrat Leisure Limited (ASX: ALL) share price.
Both stocks have performed well since the start of 2019 with gains of over 20% each when the ASX 200 is up 13%. But there's plenty of room for building materials company James Hardie and gaming machine maker Aristocrat Leisure to jump higher when they hand in their profit results over the next few days.
Building on gains
The stabilisation of US housing construction data is adding to hopes that James Hardie will give investors something to cheer about when it hands in its full year report card next Tuesday.
Citigroup is forecasting a "solid" net profit figure of US$304 million for the year, or up 4%, compare to management's guidance of US$295 million to US$315 million.
"Delivery of JHX's refreshed strategy is critical to a further re-rating of the stock," said the broker who sees upside earnings risk for James Hardie.
"Our forecast 3-year CAGR [compound annual growth rate] of 15% is impressive, but should management deliver to the top end of their targets, we estimate JHX's 3-year CAGR would be closer to 20%."
Citi has a "buy" recommendation on the stock with a price target of $21 a share.
Odds in favour of Aristocrat
Another favourite among brokers is Aristocrat Leisure. More than three quarters of the brokers covering the stock have a buy recommendation on the company.
This makes its half year results announcement on Thursday a hotly anticipated event and the key thing investors will want to see is a big growth number for its social gaming division.
JP Morgan believes 2019 is a "transition year" for the company's digital division and sees significant upside in FY20.
Aristocrat's land-based earnings (poker machines) is no slouch either as the company has probably captured market share from its rivals as Aristocrat's games have been more popular among punters.
The stock looks cheap too. Aristocrat is trading on a FY20 consensus price-earnings of 18.4 times, which is below its five-year average of 20.4 times.
JP Morgan has an "overweight" recommendation on the stock with a price target of $33.25 per share.
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