What to expect this reporting season & July overview

Bell Direct equities strategist, Julia Lee, comments on:

• The sharemarket in July: a flat performance (0’14”)
• Australia underperforming against its international peers: an ongoing theme in 2017 (1’21”)
• Earnings season expectations: FY2017 double digit growth vs. FY2018 single digit growth (2’35”)
• Stocks with positive performance vs. downgrade cycle stocks (3’05”)
• Most shorted stocks in the market and potential gains (4’03”)

The small ordinaries and mid-cad index are both down in July whilst the large cap stocks have held up the market with banks bouncing back as capital raisings are expected to be off the cards for the next few years.

With the Australian sharemarket underperforming its international counterparts in 2017, investors should ensure to include international diversification as part of their strategy.

In terms of the upcoming reporting season, the market expects Full-Year 2017 earnings growth of 18% with low single digit growth expected for Full-Year 2018.

Mining service stocks seem to have bottomed out and stocks like AGL, CSL and Coachlear should release some strong growth numbers. Other stocks like Telstra and Coca-Cola Amatil seem to be stuck in a downgrade cycle.

Keep an eye on the stocks with the biggest short positions in the market as they have the potential of dougle digit gains if they outperform expectations.