The COVID-19 pandemic is poised to make the upcoming reporting season one to remember for some time. Since late-March, many companies on the ASX have been pulling their full-year earnings guidance and have been unable to provide assurances to investors. On that note, let’s take a look at 7 ASX shares that I’ll be keeping a close eye on during reporting season.
The Afterpay share price has been a bellwether of overall market enthusiasm during the pandemic. With online shopping and eCommerce platforms thriving during the lockdown period, it will be interesting to see how Afterpay has harnessed the momentum and how the company plans to grow as the overall economy struggles.
BHP boasts a strong balance sheet and low-cost operations with earnings coming from iron ore, copper and coal. The company recently reported a record-breaking quarterly output of iron ore on the back of robust demand from Chinese steel mills. With iron ore being its biggest money maker, BHP will be one to watch this reporting season, especially for how the company treats its dividend.
Mirvac owns and operates a commercial property portfolio that is exposed to office, retail and industrial properties, which, together, account for 59% of group earnings. The coronavirus pandemic has wreaked havoc on retail and other commercial rental incomes so I’ll be keen to find out exactly how Mirvac is going at protecting its income streams.
Flight Centre Travel Group Ltd (ASX: FLT)
The pandemic has created an unprecedented challenge for travel and leisure companies like Flight Centre. The company has completed a $700 million equity raising and reduced its annualised operating expenses by $1.9 billion. With domestic travel looking to have a protracted recovery, reporting season will help reveal the full impact the pandemic has had on Flight Centre and how the company plans to recover.
This company has emerged as a leader during the pandemic, which has seen the ResMed share price make stellar gains for the year. The company tripled its ventilator production to more than 52,000 units in order to fulfil an urgent contract from the Australian Government. It will be interesting to see how the company has performed during this period and how it is looking to sustain growth beyond the pandemic.
Kogan.com is fast becoming a household name, thanks in part to the coronavirus pandemic. During the lockdown period, Kogan’s active customer base grew to over 2 million, with an additional 126,000 customers being added in May alone. The online retailer also completed a $115 million capital raising in order to accelerate future acquisition opportunities. With the Kogan share price already looking like investors have priced in the company’s recent success, it will be fascinating to see whether Kogan has any upside surprises left to reveal.
During the initial lockdown period, many people flocked to complete home improvements and also set up home offices. Wesfarmers owns both Bunnings and Officeworks, which are 2 companies that obviously benefitted from these trends. On the other hand, the company’s Target and K-Mart stores have suffered from reduced foot traffic resulting from lockdowns.
Should you buy?
With the S&P/ASX200 (ASX: XJO) rallying since the peak of the pandemic, many people have thrown out fundamentals and harnessed the momentum through speculation. As a result, the share prices of many companies on the ASX (in my opinion) have been overinflated, whilst others have also been oversold.
I think this reporting season will no doubt reveal the reality and provide investors with some great opportunities. I think a good exercise for investors would be to compile a watchlist of shares they wish to pay close attention to during reporting season in order to take full advantage of these opportunities when they arise.
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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited, Kogan.com ltd, and ResMed Inc. 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.