Rudi’s View: Five Bellwethers For August

Rudi's View | Aug 06 2025

In this week's Weekly Insights:

-Five Bellwethers For August
-A Nasty Surprise From Boss Energy
-Some Changes To Curated Lists
-FNArena Talks

By Rudi Filapek-Vandyck, Editor

Five Bellwethers For August

Looking back over the (more than) twenty years of closely monitoring corporate results seasons in Australia, one of the most commonly made mistakes by investors is assuming a share price that has already run hard leading into the result must by definition soon run out of oxygen.

This year's August season already presented us with the perfect example; global CPAP market leader ResMed ((RMD)).

With the share price up some 29% over the past twelve months, and rallying 9% in the immediate lead-in to Friday's Q4 result release, one could be inclined to assume the only logical outcome would be profit-taking or a sell-off from disappointment next, but the shares have added more gain and held their ground in an overall weaker market.

In a time of fragile sentiment, with indices near all-time record highs, and constant erratic tariff policy moves coming out of the White House, one can never be too confident about what the immediate future looks like, but if analysts updated modeling and forecasts are anything to go by, this share price still has a lot of upside potential in front of it.

FNArena's consensus price target has improved to $47.46 from $46 prior to Friday's update implying today's share price below $43 could still add more than 10% over the year ahead, dividends not included.

It is still early days, of course, but ResMed's continued outperformance echoes my personal observations from the two decades past.

It sends an apposite warning to investors ahead of the deluge in market updates forthcoming: don't give up on your winners simply because they have performed well and don't automatically assume that hiding in cheaper-priced market laggards is by default a winning strategy.

Regarding the latter, two other companies also reported thus far and both market laggards --Champion Iron ((CIA)) and Rio Tinto ((RIO))-- underwhelmed and saw their share price weaken post market update. Both share prices are now trading below price levels of this time last year.

Share markets have become extremely polarised post the 2020 pandemic and the past three years in particular have kept a lid on cyclicals and smaller cap stocks in general.

And while many a professional investor and market commentator has been predicting a broadening of the market's positive momentum for quite a while, the all-important question remains whether August will provide enough triggers for such a broadening of the rally into those segments largely ignored and left behind?

My personal view is August comes too early. Both the Federal Reserve and the RBA locally are still figuring out the possible effects from US import tariffs, as are, by the way, most CEOs and CFOs around the world.

While the general expectation is that consumer spending and housing construction will be in better shape by this time next year, there's still potential for disappointment and negative news in the shorter-term.

Flight Centre ((FLT)) just issued its second profit warning in four months. Its share price is now back where it was during the April sell-off. Appen's ((APX)) market update equally saw more selling orders kicking in.

Gold miner Greatland Resources ((GGP)) has only been listed for six weeks on the local bourse but it is already facing scrutiny about its updated guidance on costs, effectively translating into a proifit warning this early in its public existence in Australia.

Whereas many a market commentator is warning investors about a sizeable spike in volatility this season, the risks are not necessarily concentrated inside the 40% of ASX-listed companies that carried the index to a new record high three weeks ago.

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Momentum Favours Telcos

Analysts have been busy mostly with reducing forecasts both during and after the school holidays in July. Consensus is now projecting the average earnings per share (EPS) to retreat by -1.7% from the year prior in FY25. It'll mark the third year in a row of net negative earnings growth for corporate Australia.

A lot has to do with the oversized importance of miners and energy companies, but also: the current consensus forecast for FY26 is a positive 4.8% average growth, albeit that number is now gradually sliding south (and probably will be lower by the end of this month).

Outside of miners and energy companies, most sectors carry positive expectations, but extreme polarisation remains the key word, including inside sectors. This set-up works in both directions, of course.

One sector caught my eye as it seems to stand out. Firstly, through positive share price performances. Secondly, through ongoing positive prospects. And thirdly, because of a lack of the extreme polarisation that still dominates most other market segments.