The August reporting season has only kicked off, but we’ve already seen some significant share price action. These S&P/ASX 200 Index (Index:^AXJO) stocks could be next to deliver positive surprises in the coming weeks.
Some of the reporting season heroes so far include the Nick Scali Limited (ASX: NCK) share price, which hit a record high yesterday of $8.80, and the Centuria Office REIT (ASX: COF) share price.
But Goldman Sachs reckons there are several other ASX stocks that are likely to beat expectations when they turn in their profit results.
Heading for the clouds
One of the standouts is the Nextdc Ltd (ASX: NXT) share price. Mind you, it isn’t only Goldman Sachs that’s a believer. Several other brokers have highlighted the data centre operator as a potential reporting season winner.
“We expect NEXTDC to have a very strong operating result with record contracted MW, underpinned by 2×6 MW Melbourne contracts,” said Goldman Sachs.
“We see upside risk to market expectations, given accelerating Enterprise demand (which are higher yielding vs. hyperscale) and ongoing growth in interconnection revenues.”
Consensus earnings upgrade candidate
Another potential profit season hero in the making is the Seven Group Holdings Ltd (ASX: SVW) share price.
I hold the stock and share Goldman’s positive sentiment. It believes the market is underestimating the underlying strength of the heavy construction equipment rental group.
The group’s WesTrac division (Caterpillar dealer) is benefiting from increased mining activity brought on by the high iron ore price. It’s also winning market share from rival Komatsu.
Its Coats Hire business should also be holding up due to its exposure to infrastructure construction, despite Victoria’s stage four COVID-19 shutdown.
Low bar to jump over
Meanwhile, the BlueScope Steel Limited (ASX: BSL) share price could come out tops this month as expectations are set low.
This is another stock that I think is undervalued. The BSL share price is lagging the market with a 22% fall since the start of 2020.
“BSL has pre-guided their result, so outlook commentary and capital management is key,” said the broker.
“With the market already expecting downbeat (or lack of) 1H21 guidance or forward-looking commentary, we see upside risk from neutral-positive guidance.”
The steel products manufacturer’s balance sheet is also strong, which means it can sustain its dividend and is unlikely to announce a surprise cap raise.
That last point already makes the stock unusual in this coronavirus-stricken world.
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Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited and Seven Group Holdings Limited. Connect with me on Twitter @brenlau.
The Motley Fool Australia has no position in any of the stocks mentioned. 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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