Rudi’s View: Final Preparations For August

This story features CAPSTONE COPPER CORP., and other companies.
For more info SHARE ANALYSIS: CSC
The company is included in ASX200, ASX300 and ALL-ORDS

Expect downgrades, and upside dividend surprises, and day-to-day volatility, plus lots and lots more.

In today's edition:

• Buckle Up, Says Macquarie
• UBS Sees A Different Rate Hike Cycle
• Diversified Financials & Infrastructure
• Transport & Waste Management
• Small Caps
• Technology & Online Classifieds
• Ord Minnett Adds Conviction

By Rudi Filapek-Vandyck, Editor

It’s very early days, but given how tough the past six months have been for many an investment portfolio in Australia, I reckon local investors are happy to embrace every little bit of optimism and positive news.

On Monday, share prices in copper producer Capstone Copper ((CSC)) and data analysis and marketing company Vista Group International ((VGL)) are continuing the underlying positive undercurrent that has dominated the early local result releases that also featured Ampol ((ALD)), James Hardie ((JHX)), Newmont Corp ((NEM)), and Rio Tinto ((RIO)).

Canadian iron ore miner Champion Iron ((CIA)) is thus far the only negative outlier. But, as said, it’s early days.

Give it a week or so and we’ll be in the thick of it. Add another week and we’ll find ourselves in the eye of the storm.

Soon the FNArena Corporate Results Monitor will start providing daily updates. Its calendar for the season is looking chock-a-block already, in particular the final nine days of the month.

https://fnarena.com/index.php/reporting_season/

Buckle Up, Says Macquarie

Macquarie strategists are preparing for a difficult results season over the four weeks ahead. In-house analysts have been extra-busy with culling earnings forecasts over the weeks past.

The expectation is that companies will issue conservative and cautious forward-looking guidance, adding more pressure on analysts’ forecasts.

The quote that sums up the general anticipation:

“Results will be challenging as a slowing cycle and conservative guidance likely drives EPS downgrades”.

Macquarie’s EPS growth forecast has (for now) settled around 8.9% growth, which will be the first advance since 2022, with the added observation it’s all about resources.

Outside of the resources sector, Macquarie sees little growth elsewhere. FY27 EPS growth forecasts for resources and banks have been downgraded, reducing the market’s growth forecast to 7.2% for the twelve months ahead.

If Macquarie’s projections prove correct, banks will have a strong year ahead, while momentum slows markedly for resources, and REITs will become the strongest growers next year, with domestic industrials second.

Among the few companies reporting this week, Macquarie strategists prefer Block ((XYZ)) and News Corp ((NWS)) with both likely to benefit if/when the AI trade loses momentum globally and money is seeking to rotate elsewhere.

Further out in the following week, Computershare is favoured with this company currently enjoying upgrades to forecasts plus the stock seen as a beneficiary of potential Fed rate hikes.

Amcor ((AMC)) is equally enjoying upgrades to forecasts and adds specific defensive characteristics.

Treasury Wine Estates ((TWE)) is mentioned as one of the most unloved stocks in the ASX100, but with emerging new momentum in the share price also carried by recent upgrades to forecasts.

Macquarie is not so keen on Beach Energy ((BPT)), with its shares suffering from poor momentum while in-house forecasts sit below market consensus.

The same arguments are put forward for Pinnacle Investment Management ((PNI)). Both AGL Energy ((AGL)) and Origin Energy ((ORG)) are equally disliked, with forecasts falling in light of a structurally oversupplied electricity market.

Elsewhere, the broker’s healthcare desk has identified ResMed ((RMD)) and Ramsay Health Care ((RHC)) as sector preferences while CSL ((CSL)) and Cochlear ((COH)) are least preferred.

Key picks inside the consumer-oriented sector are Sigma Healthcare ((SIG)), Coles Group ((COL)), Guzman Y Gomez ((GYG)), and JB Hi-Fi ((JBH)).

UBS Sees A Different Rate Hike Cycle

Strategists at UBS are equally cautious, in particular vis-a-vis sectors most exposed to domestic housing and consumer budgets. UBS thus doesn’t like consumer discretionary stocks or REITs.

Instead, this strategy team is directing its attention towards structural growth and AI exposure through mining and industrials. UBS also likes healthcare because the sector looks cheap and there might be early signals of a turnaround happening.

There are currently only three healthcare stocks rated Buy at UBS; CSL ((CSL)), ResMed ((RMD)), and Telix Pharmaceuticals ((TLX)).

Among industrials, UBS’ focus is on mining capital expenditure, infrastructure, data centres, defence and energy investment.

Equally noteworthy is that UBS thinks the current cycle won’t be a copy from the past. Even if the RBA is now done with tightening, UBS doesn’t think the real estate sector will necessarily benefit. The inhouse view is there’s a much sharper and longer-lasting slump ahead for the Australian property markets.

If forced to choose, UBS thus prefers consumer-exposed names such as Premier Investments ((PMV)), JB Hi-Fi, Metcash ((MTS)), Endeavour Group ((EDV)), Super Retail ((SUL)), and Collins Foods ((CKF)) over real estate alternatives.

UBS’s most recent strategy update also lines up a list of “rate relief” ideas with all stocks mentioned having underperformed the broader market by at least -10% over the past twelve months.

That list includes Pexa Group ((PXA)), ARB Corp ((ARB)), Seek ((SEK)), Premier Investments, REA Group ((REA)), JB Hi-Fi and Stockland ((SGP)), among others.

Diversified Financials & Infrastructure

Ahead of August results, Citi has Buy ratings for diversified financials AMP Ltd ((AMP)), Challenger ((CGF)) and Generation Development ((GDG)) and Neutral ratings for Computershare ((CPU)), the ASX ((ASX)) and Perpetual ((PPT)).

Aside from results, the analysts report their focus will include:

• AMP; potential further upside from China Partnerships and scope for more buybacks
• Challenger; expected to supplement its buyback with the previously flagged $300m but otherwise any further capital return is believed likely some way off
• Computershare; how much the M&A pick-up and higher rates will benefit the FY27 outlook
• ASX; any further comfort on FY27/28 costs and medium term margins and growth ahead of the new CEO joining on 1 September.

Elsewhere, Citi’s infrastructure desk has become more enthusiastic about prospects for Buy-rated APA Group ((APA)), underpinned by two key factors.

Factor number one is that recent M&A involving gas pipeline infrastructure –Morgan Stanley’s purchase of Epic Energy– suggests APA Group is undervalued by some -10%.

Number two is the emerging crucial role of gas infrastructure in powering Australia’s digital economy.

A bonus is APA shares have entered the August results season carried by positive momentum.

Extra observation: Citi currently has the highest price target for APA shares among all brokers monitored by FNArena. It is also the only target to date that remains noticeably above the share price (see Stock Analysis).

Morgan Stanley’s preferences among infrastructure options are with Auckland International Airport ((AIA)) and Transurban ((TCL)). Both are Equal-Weight rated, equivalent to Neutral/Hold.

Least preferred is Aurizon Holdings ((AZJ)). The analysts see a downside risk skew for FY27 earnings on contract expiries and mixed El Nino impacts.

Transport & Waste Management

Jarden has zoomed in on transport and waste management, observing share prices have come under pressure recently as consensus forecasts have been pared back.

The good news is the analysts no longer see lots of potential for negative surprises.

The onus has therefore shifted to management teams providing guidance for the period ahead. Here, Jarden suspects there remains room for disappointment from Brambles ((BXB)), Cleanaway Waste Management ((CWY)), and Qantas Airways ((QAN)).

But wait, this is not where the good news stops. Jarden sees fundamental value for all three at current share prices. Brambles is rated Overweight, one notch below Buy. Aurizon Holdings ((AZJ)) is rated Neutral.

All others, including Virgin Australia Holdings ((VGN)), are rated Buy.

Small Caps

The Small Ordinaries is down circa -10% this year and small-cap stock pickers at Morgan Stanley have put their highest conviction behind Life360 ((360)).

Least preferred is still struggling Bapcor ((BAP)). Excess gearing, management churn, consolidation talk.

Morgan Stanley is not keen.

Potential for upside surprise is also seen for cheap bling retailer Lovisa Holdings ((LOV)). A recent tour through the UK has suggested to the analysts Lovisa could be delivering better sales and higher margins.

Were management to issue better guidance for FY27 on the loss-making format, the stock will probably be re-rated, the analysts suggest.

Technology & Online Classifieds

August will likely arrive too early, but maybe by February or the August results season next year investors might be prepared to once again embrace Australian software stocks. Such is the thesis put forward by sector analysts at RBC Capital.

They also believe a weaker USD might feature heavily for the sector this month as well.

Within the software sector, RBC’s new approach centres around the question whether AI agents can transact around an application or whether it needs to go through the existing channel.

The preference remains with companies that operate systems of record and/or mission-critical products and services for enterprise workloads.

This includes the likes of TechnologyOne ((TNE)), WiseTech Global ((WTC)), Pro Medicus ((PME)) and Fineos Corp ((FCL)) which are preferred over the likes of Xero ((XRO)), Nuix ((NXL)), and Hansen Technologies ((HSN)).

In addition, RBC remains positive on data centres and networking players and thus on NextDC ((NXT)), Macquarie Technology Group ((MAQ)) and Megaport ((MP1)).

Oddly enough, both TechOne and Megaport have been identified as Top Picks for August, but TechOne doesn’t report this month.

Peers at Morgan Stanley have placed their highest conviction behind NextDC and Infratil ((IFT)). This broker is least keen on traditional media and the telecom sector as satellite disruption awaits the latter sector.

UBS’ expectations for the local online classifieds sector are truly a mixed bag of slowing momentum, lower volumes, negative impact from global macro and domestic property tax changes but also potential for better cost control and incremental comfort on AI risks, while yield growth is seen as a stable driver of growth in FY27 for Car Group ((CAR)) and Seek ((SEK)).

Both are preferred to REA Group ((REA)) for two key reasons; a stronger growth outlook (projected CAGR in double digits), plus a relative valuation discount.

Ord Minnett Adds Conviction

On Monday, Ord Minnett added Electro Optic Systems ((EOS)) to its Analysts’ Conviction List.

Ord Minnett expects local businesses with US earnings exposure to outperform domestic businesses linked to property and consumer spending. Energy and resources sectors are expected to shine throughout this season.

Ord Minnett highlights the likes of JB Hi-Fi and Wesfarmers ((WES)), Zip Co ((ZIP)), Breville Group ((BRG)) and Reece ((REH)), Pro Medicus, REA Group, and Service Stream ((SSM)).

I’ll leave the closing remark to Ord Minnett analyst Athena Kospetas:

“Reporting seasons always bring uncertainty, but this time around carries a heavier dose. Confession season effectively started early, with three rate hikes, tax reform, the AI boom and rising Middle East tensions all forcing companies to reset their earnings expectations earlier than usual.”

I highly recommend subscribers also read:

https://fnarena.com/index.php/2026/07/23/rudis-view-pre-august-picks-in-resources-retail-small-caps/

https://fnarena.com/index.php/2026/07/16/rudis-view-small-cap-favourites-ai-more/

https://fnarena.com/index.php/2026/07/09/rudis-view-julys-stock-pickers-favourites/

https://fnarena.com/index.php/2026/07/02/rudis-view-best-buys-conviction-calls-in-july/

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(This story was written on Monday, 3rd August 2026. It was published on the day in the form of an email to paying subscribers, and again on Wednesday as a story on the website).

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult their licensed investment adviser before making any decisions. All views are mine and are not, by association, FNArenas. See the disclaimer on the website.

In addition, since FNArena runs a Model Portfolio based on my research into All-Weather Performers, it is more than likely that some of the stocks mentioned are included in this portfolio. For all questions, contact us via the direct messaging system on the website).

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