It's so far, so good in calendar year 2015 with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) set to close out the month of January up around 3%.
That's a great return in just one month but will it be repeated in February?
Only time will tell…however to give your portfolio the best chance of producing a positive performance it's important to take the time to consider what may occur this reporting season. With the majority of ASX-listed stocks due to report during the month, stocks that report worse-than-expected results are bound to find themselves relegated to the 'sin bin' with their share prices falling commensurately.
A recent report by one leading broker identified a handful of stocks which their analysts believe are at risk of surprising the market on the downside. If these companies do disappoint, shareholders in these stocks could see their shares sold off. Although it's worth noting nobody can see the future and quite the opposite could happen.
However, here are three potential disappointments:
- Sonic Healthcare Limited (ASX: SHL) has already tempered expectations with guidance released back in November that the company was relying on a strong second half. According to the broker, pathology volumes have remained weak throughout the first half which doesn't set the company up for providing upbeat commentary for the second half.
- UGL Limited (ASX: UGL) – while stocks exposed to mining services have already been priced down to multi-year lows, there is still the possibility that even this isn't low enough. With the potential for further revisions on contract performances, margins could become even slimmer for UGL than the market currently envisages.
- GWA Group Ltd (ASX: GWA) is primarily an importer rather than a manufacturer these days. This means the weaker Australian dollar is a hindrance rather than a help. Arguably, this situation is more significant than investors have factored in so far.
