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.
