5 stocks you should watch this reporting season

Many investors will be glued to their screens in February, as the first-half 2023-2024 reporting season rolls around. Professional and mum-and-dad investors alike will watch to see how their biggest holdings performed, and more critically, what the best management teams see on the road ahead.

There’s always plenty of noise in financial markets during reporting seasons, as commentators parse results and share prices move either up, down – or sometimes, sideways.

In the following, I’ve sought to focus on a handful of companies that are likely worth watching closely. Three of the five were ranked among Livewire readers’ 20 most-tipped stocks for 2024, and (arguably) all of them provide a read-through for their respective sectors and some of the biggest themes in markets currently.

Woodside Energy Group (ASX: WDS) – 27 February

Australia’s energy supply remains a crucial theme for several reasons, including the effect that elevated power prices have on consumer budgets and the perennial debate surrounding renewables.

Australia’s largest oil and gas company by market cap, Woodside also ranks inside our top 10 biggest ASX-listed firms overall. And a potential merger with competitor Santos (ASX: STO), with news of early stage talks between the two management teams breaking late last year, would add another $20 billion or so to the combined entity’s market cap.

Woodside’s CEO Meg O’Neill has sought to cool speculation around a potential tie-up in recent days.

Overall broker rating

BUY (8 buy, 6 hold, 2 sell)

Recent broker moves

• Morgans upgraded WDS to ADD from hold on 28 January, lifting its price target to $34.30 from $33.50.
• Jarden downgraded the company to UNDERWEIGHT from neutral on 15 January, cutting its price target to $29 from $30.50
• JPMorgan on 11 January upgraded Woodside to OVERWEIGHT from neutral, increasing its price target to $34.80 from $34.20.

Woodside shares traded at $31.91 when markets closed on Monday 29 January.

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Pilbara Minerals (ASX: PLS) – 22 February (estimate)

Battery metals are part of the broader energy investment theme, but rate a mention here given the drastic fall in lithium prices – not to mention the spike in M&A activity in the back end of last year.

As Australia’s largest pure-play lithium producer, Pilbara is highly leveraged to the material’s price moves. In line with the falling lithium price, PLS and others have sold off heavily in the higher interest rate environment. But with increasing speculation that 2024 could see an RBA rate cut, could a turnaround be in the offing? Investors will have their eyes peeled for a sign of what Pilbara’s CEO Dale Henderson thinks in a few weeks’ time.

Overall broker rating

HOLD (10 buy, 7 hold, 4 sell)

Recent broker moves

• Citi upgraded Pilbara to NEUTRAL from sell on 23 January but cut its price target to $3.60 from $3.90.
• Goldman Sachs downgraded the company to SELL on 14 January but left its price target at $3.20.

Pilbara shares closed at $3.60 on Monday 29 January.

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Wesfarmers (ASX: WES) – 15 February

Australia’s largest consumer discretionary company, Wesfarmers owns hardware retail behemoth Bunnings, which is its primary asset among multiple business units.

ABS retail sales figures for December were softer than expected, falling 2.7% on a seasonally adjusted basis versus the drop of 1.7% many analysts anticipated. This was even after allowing for the pull-forward effect of the increasingly popular Black Friday sales. But there remains strong speculation that the RBA’s next move on rates is down, with each of Australia’s big four banks tipping a rate cut sometime this year.

While relieving pressure on household budgets, this could also see a pick-up in housing construction, which would bode well for Wesfarmers. We’ll be watching to see what CEO Rob Scott has to say in mid-February.

Overall broker rating

HOLD (8 buy, 7 hold, 3 sell)

Recent broker moves

• Macquarie downgraded Wesfarmers to NEUTRAL from outperform on 26 January, cutting its price target to $56.30 from $57.
• Goldman Sachs upgraded WES to BUY from neutral on 25 January, lifting its price target to $62.90 from $49.80.

WES shares closed at $57.89 on Monday 29 January

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James Hardie (ASX: JHX) – 13 February

Australians remain as obsessed as ever with house prices, but there’s also heightened debate about what both homeowners and renters pay to keep a roof over their heads. With ongoing policy considerations about how to address the elevated cost of living, we may also see the housing debate shift from price to volume – that’s according to a recent Morgan Stanley report.

James Hardie stands out in having managed to successfully pass along rising costs, lifting its Australian building materials prices by 15% in the September quarter, CEO Aaron Erter told investors in November. He also predicted an uptick in renovation work in late 2024. It will be interesting to see whether this positive outlook continues when the firm reports.

Overall broker rating

STRONG BUY (12 buy, 5 hold, 0 sell)

Recent broker moves.

• Bank of America downgraded JHX to UNDERPERFORM from neutral in January but lifted its price target to $53.80 from $52.
• RBC Capital Markets on 19 December assumed SECTOR PERFORM and lifted its price target to $54 from $50.

JHX shares closed at $57.46 on Monday 29 January.

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The a2 Milk Company (ASX: A2M) – 19 February

What’s going on in the Chinese economy is always of interest to Australian investors. But getting an accurate read is difficult, even for professional analysts, which is why the views of A2 Milk’s management teams are watched so closely.

China is a crucial market for the dairy products and infant formula manufacturer. In the wake of recent news of a drop in China’s birth rate in 2023, Livewire’s Carl Capolingua recently looked at how it affects Citi’s view on A2 Milk.

Overall broker rating

BUY (6 buy, 4 hold, 0 sell)

Recent broker moves

• Jarden upgraded A2M to OVERWEIGHT from neutral on 22 January, lifting its price target to NZ$5.15 from NZ$4.95
• CLSA downgraded the company to UNDERPERFORM from outperform on 8 January, with a price target of $4.40
• Citi upgraded A2M to BUY from neutral in mid-November and lifted its price target to $4.81.

A2Milk shares closed at $4.69 on Monday 29 January.

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Which company results have you most intrigued?

The stocks mentioned above are just a handful of the many that could be discussed in the context of various important themes right now. 

Let us know in the comments below which companies you think will provide valuable insights and why.