Am I going crazy?
I'm not sure whether there are more outrageous headlines this year, or if there's simply been more action this reporting season, but investors all around the country must be feeling pretty nervous as the 10am bell rings.
Massive Moves
Without fail, every day this week either a company in my portfolio or on my 'to buy' watchlist has risen or fallen sharply at the open, providing a stark reminder that buying just before earnings are released can be a risky business.
So far we've seen top-notch companies release sub-par results, and previously out-of-favour companies report stellar turnarounds, meanwhile shareholders have also had to contend with the oil price dropping to another all-time low and China destabilising global markets again by deregulating its currency.
5 companies you NEED to look at after this reporting season
Today I'm going to focus on five companies I believe investors need to look closely at investing in following the earnings season. The reasons vary but they're all great companies!
First up is one of my top stock picks right now, FlexiGroup Limited (ASX: FXL). The loss of the CEO plus two directors as well as a sneaky profit downgrade has seen the share price fall 21% in the last five trading days. It now trades on a forward price to earnings ratio of just 8 and dividend yield approaching 7%. AND profit is expected to rise (albeit modestly) next year.
Next is OrotonGroup Limited (ASX: ORL), which is experiencing the impact that poor investor sentiment can have. A failed agreement with Brooks Brothers plus falling sales is never a good combination, however yesterday the group announced strong sales in June and July and I believe the Oroton brand remains a strong drawcard for luxury consumers. It's cheap and could offer big upside over the next five years.
The last three companies are well known to readers of the articles on Fool.com.au, because they're three of the best managed and financially strongest companies on the ASX. All three have had volatile years but still offer investors massive upside as they spread their wings overseas.
REA Group Limited (ASX: REA) shares initially plunged on the release of its full-year results, however the key takeaway is that the group's Realestate.com.au website captured 85% of viewing time among all viewing time amongst competitors. An amazing achievement! The group's overseas investments gained a 'pass' mark from the market and the company remains as strong as ever.
Carsales.Com Ltd (ASX: CAR) shares fell 5% yesterday after the company reported an 11.3% rise in net profit. Investors are concerned about the 'International' and 'Data and Research' divisions that reported falling earnings, however a 10% increase in the dividend kept most shareholders relatively happy. I like the investments in overseas websites where carsales.com.au can add operational expertise to boost performance, however the payoff period will be longer than many analysts would prefer to see.
Finally, Domino's Pizza Enterprises Ltd. (ASX: DMP) remains one of the shining lights on the ASX. No matter how expensive it looks, the share price continues rising as the company proves it can continue growing at huge rates. Profit and revenue were up 40% and 19% respectively over the last 12 months and the dividend was increased by 42% following strong growth in both Australia and overseas markets.
Domino's trades on 52 times trailing earnings, which is steep, however the lure of further gains and perhaps more acquisitions is enticing investors to pay more than normal for the company.
