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Leading broker names 11 shares to watch and 10 shares to avoid this earnings season

Next week earnings season will kick off and, if February is anything to go by, it is likely to be a volatile period for many of Australia’s most popular shares.

Ahead of the event, analysts at Morgans have been picking out the shares that they believe will be the winners and losers this season.

Here are the shares that Morgans is tipping to have a good month:

Morgans has picked out infant formula and fresh milk company A2 Milk Company Ltd (ASX: A2M), auto retailer AP Eagers Ltd (ASX: APE), mortgage broker Australian Finance Group Ltd (ASX: AFG), and private health insurer Medibank Private Ltd (ASX: MPL) as shares that could outperform the market’s expectations next month.

The companies that Morgans believes will reward their shareholders with capital management initiatives are mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), energy company Origin Energy Ltd (ASX: ORG), and rail freight operator company Aurizon Holdings Ltd (ASX: AZJ).

And finally, three companies which the broker expects to reveal solid fundamentals are waste management company Cleanaway Waste Management Ltd (ASX: CWY), telco giant Telstra Corporation Ltd (ASX: TLS), and global wine company Treasury Wine Estates Ltd (ASX: TWE).

But Morgans doesn’t expect all shares to perform as well as these. In fact, it has listed no less than 10 shares which it thinks investors ought to avoid next month.

Amongst the ten are the high flying CSL Limited (ASX: CSL), Nanosonics Ltd (ASX: NAN), and REA Group Limited (ASX: REA). Morgans may believe investors are expecting far too much from these companies next month based on the recent appreciation of their respective share prices.

Also on its avoid list are energy company AGL Energy Limited (ASX: AGL), struggling infant formula company Bellamy’s Australia Ltd (ASX: BAL), online auto listings company Carsales.Com Ltd (ASX: CAR), slow growing beverage giant Coca-Cola Amatil Ltd (ASX: CCL), travel agent Flight Centre Travel Group Ltd (ASX: FLT), heavily shorted data centre operator NEXTDC Ltd (ASX: NXT), and out of favour energy producer Woodside Petroleum Limited (ASX: WPL).

Whether Morgans is on the money with its predictions, only time will tell. But it certainly is food for thought.

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James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited, Nanosonics Limited, Telstra Limited, and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Bellamy's Australia, Limited, Coca-Cola Amatil Limited, and REA Group Limited. 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 Scott Phillips.

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