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Which stocks are tipped to beat profit expectations in February?

Feeling whiplashed by the recent market volatility? Don’t hold your breath but we could see earnings upgrades when the reporting season kicks off next month.

These are dangerous times to be a bull but there are two tailwinds that are keeping me optimistic about the upcoming results season.

The first is the low consensus expectations with analysts only tipping a 2.1% earnings growth forecast for the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) for 2014-15.

That’s a very low bar and broker CIMB thinks earnings growth is likely to come in at twice that estimate for the current financial year.

The second tailwind is the reluctance of analysts to adjust their forecast to reflect the weaker fuel price and Australian dollar even though both assets are likely to remain weak over the medium term, if not longer.

The impact of the exchange rate and oil price is significant for many ASX-listed stocks, particularly in the mining sector given that miners sell in US dollars and their operations are energy intensive.

I have written about how gold miners are set to benefit from this thematic and Citigroup has just issued a note estimating that the sharp drop in the oil price will translate to an average 7% fall in cash costs for global gold miners.

But it is open pit miners like Beadell Resources Ltd (ASX: BDR), Perseus Mining Limited (ASX: PRU), Resolute Mining Limited (ASX: RSG) and Regis Resources Limited (ASX: RRL) that stand to benefit more as the broker believes that up to a quarter of their unit costs comprise of diesel or fuel.

Meanwhile, there has also been little factored into the earnings expectations of retailers and healthcare companies from the dramatic changes in exchange rates or fuel costs.

CIMB estimates that the 19% drop in retail petrol prices is equivalent to nearly two rate cuts by the Reserve Bank of Australia (RBA), while healthcare stocks have rallied for other reasons than the exchange rate (the weaker Australian dollar is positive for the sector).

Healthcare stocks that could deliver a positive earnings surprise this February include sleep apnea device maker ResMed Inc. (ASX: RMD) and medical facilities operator Sonic Healthcare Limited (ASX: SHL).

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Motley Fool contributor Brendon Lau does not own stocks mentioned in this article.

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