Top broker names 11 ASX shares that could surprise during earnings season

Although earnings season has now started, it won’t be a couple of days until it really kicks off with the results of heavyweights Commonwealth Bank of Australia (ASX: CBA) and Rio Tinto Limited (ASX: RIO).

So with the majority of results on the horizon, Goldman Sachs has picked out a few shares which it believes have the potential to surprise to the upside.

The companies tipped to surprise positively are:

Qantas Airways Limited (ASX: QAN)

The broker expects Qantas to hit the upper end of its profit before tax guidance of $900 million to $950 million thanks to an improved domestic market. The broker also predicts a 7 cents per share unfranked interim dividend and a ~$378 million on-market share buyback. Qantas has been given a buy rating and $6.46 price target.

Seven Group Holdings Ltd (ASX: SVW)

Its analysts expect Seven’s result to come in above expectations with similarly strong guidance on the back of a strengthening mining capex backdrop. The broker has a buy rating and $17.20 price target on its shares.

Sims Metal Management Ltd (ASX: SGM)

The broker thinks that Sims will deliver a result that reflects the healthy industry dynamics that were seen in 2017. This has been driven by a reduction of Chinese exports, ramping electric arc furnace production, and demand for scrap metal. Goldman has a buy rating and target price of $17.74.

Other companies that have been tipped to surprise to the upside are AMP Limited (ASX: AMP), Alumina Limited (ASX: AWC), Computershare Limited (ASX: CPU), Lifestyle Communities Limited (ASX: LIC), Macquarie Group Ltd (ASX: MQG), Origin Energy Ltd (ASX: ORG), South32 Ltd (ASX: S32), and Transurban Group (ASX: TCL).

Which should you buy?

My pick of the bunch would be Qantas at this point. I have been very impressed at the way the company has cut costs and managed its capacity. And although oil prices are rising, I believe its fuel hedging and the strong Australian dollar should offer it some insulation.

Here are three more shares which I think could be big winners this earnings season.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Computershare and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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