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August reporting season produces some winners

The August company reporting season has unearthed some stocks with the potential to be real winners for SMSF investors seeking yield, according to an equities expert.

Speaking at the recent selfmanagedsuper Trustee Empowerment Day 2017, Bell Direct equities strategist Julia Lee nominated Sydney Airports, Westpac and SG Fleet as companies that presented good opportunities for income investors subsequent to August’s reporting season.

“Sydney Airports saw earnings up by 8 per cent and a higher distribution guidance,” she said.

Lee revealed Sydney Airports was currently demonstrating potential growth in earnings due to its aggressive fee schedule applied to commercial vehicles such as taxis and hire cars.

Further, she suggested investors interested in Sydney Airports had no need to be concerned about the negative impact of establishing a second airport on future earnings growth of the organisation.

“If you look at what happened in London when they opened their second airport, what you saw was some of those cheaper-margin airlines going to the more regional airport and the premium, bigger margin airlines staying at the main airport,” Lee explained.

“So [a second airport] could end up being a positive for Sydney Airports.”

Lee selected Westpac as her preferred banking stock due to its concerted effort to improve customer experience in order to drive new business or expanded use of the institution’s services from its existing clients.

“The other company I like is SG Fleet. This is a salary packaging company and they are renewing some deals in terms of the NSW government that have seen some strong growth and a growing yield story there as well,” she said.

In contrast to these potential winners, Lee warned the other factor gleaned from the August reporting period was that cheap stocks were continuing to fall.

She cited Mayne Pharma as a company experiencing this type of price movement.

“It had done really terribly in the February reporting season and the month-to-date result at August showed the share price was down another 30 per cent,” Lee said.

“Usually things that are cheap can go cheaper and cheaper so when you do think you see something that is cheap I’d try and tell myself don’t go there because it is hard to pick the bottom,” she cautioned.

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