23 Stocks on the ASX 200 To Watch This Week [16 Aug 2021]

Henry Fung

Henry is a co-founder of MF & Co. Asset Management with over 15 years of experience as a trader, investor and asset manager. Henry runs the Options Income Strategy and has a free 5-day options income strategy course you can take to learn how to use options to generate income.

August 16, 2021

This week marked another record-breaking performance from the Australian markets with the ASX200 ending up 1.2% while the ASX300 and Ordinaries closed 1.25% and 1.2% higher respectively.

This week’s biggest sector winners were banks, telcos, insurance, and agriculture.

The Australian market’s performance is being driven by a bumper earnings season, mainly because of an ebullient YoY performance from most companies viewed against the COVID-dampened corresponding quarter last year.

Mining stocks, however, were somewhat under the weather because iron ore futures slumped to a four-month low.

Last Week in ASX Stocks

The banks emerged as winners yet again this week, catalyzed by the solid results, a sizable dividend, and buyback from the Commonwealth Bank of Australia (ASX:CBA).

Though CBA ended the week flat due to profit-booking, investors have now turned bullish on other major banks including Australia and New Zealand Banking Group (ASX:ANZ), Westpac (ASX:WBC), and Macquarie (ASX:MQG), which ended the week higher by 3.18%, 3.56%, and 3.69% respectively.

Meanwhile, National Australia Bank (ASX:NAB) didn’t disappoint, reporting a 9% increase in quarterly profits to A$1.7 billion.

Investors received favourably NAB’s 79% YoY decrease in impairments from A$571 million to A$112 million.

The telecom sector got a boost from the encouraging numbers reported by Telstra (ASX:TLS), one of Australia’s largest telcos.

While the company reported 11% lower revenue, its net income grew by nearly 4%. More importantly, it committed to maintaining its dividend and stated that it expects EBITDA growth of 5%+ in FY22.

Telstra’s main rival, TPG Telecom (ASX:TPG) ended the week up 2.5% in light of its rival’s performance.

The insurance sector performed well with Insurance Australia Group (ASX:IAG) and QBE Insurance (ASX:QBE) both coming up with better than expected numbers.

While IAG reported an insurance profit of A$1 billion, up almost 25% YoY, QBE notched up a net profit of A$712 million compared to a loss of the same amount last year. IAG ended the week higher by 7.5% while QBE closed gained 10.45%.

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Agriculture was another major gainer led by bulk grain company GrainCorp (ASX:GNC) which upgraded guidance for FY21.

GrainCorp ended the week up nearly 14% after revising upwards its underlying EBITDA guidance to A$310 million – A$330 million from A$255 million to A$285 million.

Underlying NPAT was revised to $125-$140 million (previously $80-$105 million). The company will report its final FY21 results on 11 November 2021.

Integrated industrials company Downer EDI (ASX:DOW) ended the week up nearly 12% after the company announced a return to profitability with an NPAT of A$182 million.

Retirement and wealth management company AMP (ASX:AMP) reported a 57% increase in profit to A$181 million; however, the company will not declare an interim dividend. AMP shares rose nearly 8% over the week.

AGL Energy (ASX:AGL), which was expected to report good results due to favourable energy rates and strong demand, gut-punched the market with a A$2.7 billion write-down on its wind assets in North Australia.

The company reported a loss of A$2.1 billion and revenues of A$10.9 billion, down 9% YoY. Excluding the write-down, the company’s net profit was A$537 million. AGL ended the week nearly flat.

The tech sector cooled off after the buying frenzy last week triggered by Square’s (NYSE:SQ) $29 billion acquisition of AfterPay (ASX:APT). Redbubble (ASX:RBL), Nuix (ASX:NXL), and Appen (ASX: APX) ended the week down 7.5%, 2.95%, and 6% respectively.

Next Week in ASX Stocks

Annual earnings reports

Nearly 90 companies – almost a third of the entire Australian market’s capitalization – are scheduled to declare results next week.

Here are some of the major company results due during this very busy time for the ASX.

CarSales (ASX:CAR), one of Australia’s biggest car retailers is expected to report FY21 full-year results. Given that the company declared its 2H’21 results recently, there aren’t any major surprises in store.

The consensus NPAT is about A$150 million. Guidance given was A$149 million – A$153 million.

BHP (ASX:BHP), the world’s largest miner, is scheduled to declare FY21 results on Tuesday. We have research for BHP here.

The market is expecting bumper earnings from the company on the back of the recent rally in commodities, and a generous dividend as well.

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Australian appliance maker Breville (ASX:BRG) is also due to publish FY21 results on Tuesday.

Growth is expected to be robust in light of the company’s revised guidance of A$136 million and high discretionary spending on home improvement and equipment. We have research for Breville here.

Coles Group (ASX:COL), Australia’s second-largest retailer, is due to publish its FY21 result on Wednesday. Expectations are high due to the increasing tendency to stock-pile essentials amidst the virus. Consensus EBIT is A$1.84 billion. We have research for Coles here.

The Australian Securities Exchange (ASX:ASX) is due to publish FY21 results on Thursday. The market sentiment on this stock is weak due to unimpressive trading updates. The company reported 15% lower futures volumes, flat equity volumes, and lower fund-raising activity in the second half of the year. The consensus is for NPAT of A$477 million and a dividend of A$1.095 per share.

Gold miner Newcrest (ASX:NCM) will report FY21 earnings on Friday. Although the company’s trading updates have been marginally lower, it too has benefited from the rise in commodity prices. Results are expected to be in line with guidance. We have research for Newcrest here.

Base metal major South32’s (ASX:S32) FY21 results are also due this Friday. Earnings are expected to be strong given the bull run in commodity prices. Also, the market has received well its divestiture of the troublesome South Africa coal business. We have research for South32 here.

Fast-food king Domino’s (ASX:DMP) is due to report on Wednesday. The market is expecting growth in line with the company’s strong first-half performance. Trading updates showed 11% YoY growth. Consensus EBIT is A$303 million. We have research for Domino’s here.

Interim Results

Oil major Santos’ (ASX:STO) H1 results are due on Wednesday. The company is expected to report strong growth and margins due to improving oil demand.

Telecom major TPG Telecom (ASX:TPG) is due to report interim FY results on Friday. The consensus is for a 4% decline in EBITDA and a similar decline in revenue because international travel has dried up following border shutdowns.

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Fuel retailer Viva Energy Group, (ASX:VEA) will report interim results on Monday. Investors are already bullish based on the company’s strong trading updates and expect solid guidance going forward.

Upcoming listings

There are none slated for the coming week.

Economic News, Currency and Market Outlook

This week is an important one in the context of the country’s economic outlook. Australia’s July jobs data will shed light on the impact of lockdowns on the economy.

It could add more gloom – last week the NAB Business Confidence Index for July slid to (-) 8 from June’s (+) 11 reading, while the Westpac-Melbourne Institute Index of Consumer Sentiment in August 2021 fell by 4.4% (MoM) to 104.1, the lowest in a year.

Furthermore, new home sales (MoM) dipped from the previous (+) 14.8% to (-) 20.5% in July, according to data released last week by HIA.

US Fed Chair Jerome Powell will speak on Tuesday. The markets will put his speech, and on Wednesday, the FOMC meeting minutes, under the lens for an inkling of the Fed’s thinking on tapering.

At its meeting on Wednesday, the Reserve Bank of New Zealand is expected to raise interest rates in light of an improving economy.

Given the divergence of economic outlook between Australia and New Zealand, which are very close economic partners, the AUD/NZD rate is expected to reach the 1.0 level, representing a 4.7% depreciation of the AUD.

Also, weak iron ore futures could hurt the AUD in the short-medium term as the commodity is by far the country’s largest export. Next week’s BHP earnings are crucial as they will shed light on the outlook for iron ore prices for the rest of the year.

Australia’s July jobs report is due on Thursday. Consensus shows a weak outlook with the unemployment rate expected at 5%. According to the latest Roy Morgan employment series data, Australian jobs dropped by 176,000 in July because all five of Australia’s mainland states went into lockdown.

In sum, there appears to be weakness in store for the AUD against all major currencies.

Are you still looking for the best stocks to buy in 2021? We’ve put together a free report on 5 stocks that we think are the best buys on the ASX right now. Download it instantly here.

This is general advice only. MF & Co Asset Management has not considered your personal financial needs, objectives or current situation. This information is not an offer, solicitation, or a recommendation for any financial product unless expressly stated. You should seek professional investment advice before making any investment decision.

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