The stocks to buy before reporting season

About the author:

Tom Sartor
Author name:
By Tom Sartor
Job title:
Senior Analyst
Date posted:
29 July 2014, 1:17 PM
Sectors Covered:
Resources, Metals

The August results season marks a critical juncture as investors look to reported earnings and growth to validate current market valuations. Markets aren't cheap, so we're avoiding stocks that may disappoint as they look vulnerable to sharp corrections.

On the flip side, we see several opportunities to position for potential capital management and upside surprise.

Here are our best three positioning ideas heading into reporting season:

Telstra Corporation (TLS)

We see upside risk ahead of NBN renegotiations as TLS positions to win further work to fast track the NBN rollout on behalf of the federal government. TLS holds >$2bn in surplus capital allowing either capital management or acquisitions.

Our share price target for TLS is A$5.73.

SEEK Limited (SEK)

If job ad volumes keep improving, upside risk to earnings far outweighs any potential downside following results season. Post IDP float, SEK will be significantly under-geared and primed for capital management or further acquisitions.

Our share price target for SEK is A$17.90.

Domino's Pizza Enterprises (DMP)

DMP should beat its guidance. We get the strong sense these guys are building an empire, generating years of further earnings and dividend growth.

Our share price target for DMP is A$22.94.

More information

Morgans clients can access our detailed equity strategy report (Reporting season positioning: FY14) and research reports on our three stock picks. If you would like more information, please contact your nearest Morgans office.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

  • Print this page
  • Copy Link