Rudi: 16 stocks where expectations are growing for earnings season

The risks have now shifted from the macro to the micro level, argues FNArena's Rudi Filapek-Vandyck - who reveals he is still hoarding 18% cash as we head into the all-important August reporting season.

That's despite the more than 13% rally in the S&P/ASX All Ordinaries since its September lows last year.

"[Reporting season] is going to be more polarising than usual," Rudi says.

"The dynamics in the US are now different to Australia. In the US, there is a growing perception, correct or incorrect, that earnings growth might be bottoming. In Australia, we are staring towards further falls."

Miners, energy companies, banks, retailers and REITs have been predominantly responsible for these falls locally. However, digging deeper, there are some sectors that are now experiencing an acceleration in growth, Rudi argues.

One such sector is tech, with stocks like REA Group (ASX: REA), WiseTech (ASX: WTC) and Carsales.com (ASX: CAR) all seeing rising expectations in valuations and price targets, he explains, despite these stocks already rallying 41%, 76% and 20% respectively year to date.

"The message here for investors is that it's not just a low P/E that gives you value in this market. It can be higher P/E [stocks]," he says.

In this interview, Rudi names the companies with rising earnings expectations this reporting season, as well as the sectors and themes he believes investors should still steer clear of.

Plus, he also shares why he is still sitting on 18% cash (and the stocks he is hoping investors will sell so that he can put that dry powder to work).

Note: This interview was recorded on Wednesday 2nd August 2023.

https://www.livewiremarkets.com/wires...

Timecodes:
0:00 - Intro
0:31 - What investors can expect this reporting season
1:47 - Share prices are not performing as expected after beating or missing guidance
3:00 - Analyst expectations are falling rapidly - but the detail is important
3:52 - The outlook on dividends
4:44 - The sectors and stocks on Rudi's watchlist this reporting season
7:24 - The polarisation of the market today (and how this could impact future winners)
8:36 - Expectations are high for the insurers and brokers
9:25 - Tech's fate lies in the hands of the bond market
10:25 - AI and the possible beneficiaries on the ASX (some of which may surprise you)
11:05 - It's still too early to invest in REITs and retailers
12:34 - One other theme that is overcooked: The China revival
13:13 - Why Rudi is still hoarding 18% cash (and why he's not in a hurry)
15:31 - The quality stocks Rudi would like to own in the future