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Why you need these 3 ASX earnings surprise stocks in your 2020 portfolio

With the August reporting season more or less done and dusted, it’s time to take stock and look at some of the strong performing stocks over the last 12 months or so.

As we look ahead to constructing portfolios in 2020, I’ve picked out 3 hot ASX earners that I think should be at the top of the buy list as we head into next year.

1. Nanosonics Ltd  (ASX: NAN)

The Nanosonics share price surged more than 30% in one day as its full-year earnings beat market expectations and more growth is forecast for FY2020.

Nanosonics reported a 201% year-on-year surge in operating profit before tax to $18.8 million while increasing revenue by 39% to boot.

The company’s trophon2 ultrasound disinfection system has been granted approval in Japan which bodes well for a strong FY2020 result, and the company already has a strong balance sheet to leverage in the future.

Despite climbing more than 100% higher so far this year, I think the Nanosonics share price could be good value at $6.37 per share and could be an outperformer in 2020.

2. Kogan.com Ltd  (ASX: KGN)

Kogan produced yet another earnings surprise in August as it surpassed half a billion dollars worth of gross sales on the way to a $17.2 million profit, up 21.9% on the prior corresponding period (pcp).

Despite starting out as an online retailer of electronics, Kogan has now expanded its umbrella into a variety of areas including travel insurance, energy, superannuation and telecommunications.

I think Kogan’s ability to adapt and diversify could make it Australia’s answer to Amazon.com with real upside earnings potential from its recently-announced superannuation business in 2020.

3. Infigen Energy Ltd  (ASX: IFN)

Infigen was one of the top performers in the S&P/ASX200 Index (INDEXASX: XJO) in August following a strong earnings result headlined by an 11% uplift in full-year underlying earnings.

Infigen has already locked in a significant amount of FY2020 revenue, with 75% of its FY20 renewable energy generation and 100% of its expected large-scale generation certificates (LGCs) already contracted.

Given the Coalition was returned under Prime Minister Scott Morrison in May 2019, I’d expect to see a new national energy policy on the agenda in 2020.

With more clarity around energy policy, the potential for more investment in the sector should provide strong tailwinds for Infigen to continue to grow its capacity in the coming years.

While Australia does remain reliant on coal-fired gas plants, I think 2020 could represent a strong year for wind and solar energy in Australia and Infigen is one of the best-placed companies, in my opinion, to capitalise on the boom.

Foolish takeaway

These are just 3 of my favourite companies from the many ASX earnings outperformers from this August’s reporting season.

With most of the ASX200 having reported their half-year or full-year results, with the exception of the Big Four banks, September is a great time to reposition your portfolio with the clearest idea of these companies’ earnings that we’ll get all year.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Kogan.com ltd and Nanosonics 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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