Top ASX shares to buy before the February earnings season
For investors, ASX earnings season can be like a birthday and Christmas rolled into one! Okay, that might be a slight exaggeration, but this period does have the potential to deliver shareholders some lovely gifts (in the form of dividends) and, hopefully, some nice surprises too.
When company results meet the high expectations of shareholders and analysts, share prices can make big moves in the days, weeks, and months following financial updates. But, just like birthdays and Christmas, earnings results can also sometimes leave investors disappointed.
Now, encouraging investors to buy top shares ahead of earnings season is not to suggest that trying to time the market is a good idea. Successful investing typically results from buying a diversified range of high-quality companies and holding them over the long term.
But investors can still aim to buy up said companies when they are trading at attractive prices.
So here are some our writers reckon are looking pretty attractive as earnings season draws nearer:
5 ASX shares to snap up before they report (smallest to largest)
- Centuria Industrial REIT (ASX: CIP), $1.81 billion
- Life360 Inc (ASX: 360), $4.88 billion
- Woolworths Group Ltd (ASX: WOW), $36.59 billion
- ResMed Inc (ASX: RMD), $56.32 billion
- BHP Group Ltd (ASX: BHP), $203.21 billion
(Market capitalisations as of market close 17 January 2025)
Why our Fool writers love these ASX stocks
Centuria Industrial REIT
What it does: This ASX real estate investment trust (REIT) owns a portfolio of quality industrial properties in Australia's major cities. Its properties include manufacturing and production plants, distribution centres, transport logistics hubs, data centres, and cold storage facilities.
By Tristan Harrison: This is one of my favourite stocks at the moment, which is why I recently invested in it and also recommended it as my ASX dividend share pick earlier this month.
The business is benefitting from several tailwinds, including population growth, increased e-commerce adoption, the onshoring of production and assembly, rising demand for fresh food and pharmaceuticals (requiring refrigeration warehouse capacity), and increased data centre demand.
Those growth drivers are helping boost the company's rental potential and support its property valuations.
The Centuria Industrial REIT had net tangible assets (NTA) of $3.87 at 30 June 2024, so the current share price is sitting at a 27% discount to this. It's possible the NTA could rise in the FY25 first-half result, which is what I'll be closely watching.
In its FY25 first-quarter update, the ASX REIT announced it made $60 million of non-core divestments at an average 5% premium to the book value. Plus, peer Dexus Industria REIT (ASX: DXI) announced a portfolio valuation update for HY25 that included a valuation uplift of 2.4% compared to its book value.
Could Centuria Industrial REIT see rising property values this year? I think there's a good chance, particularly if any RBA rate cuts occur in the next few months.
The business expects a small increase in its rental profit and distribution in FY25. The distribution guidance of 16.3 cents translates into a current yield of 5.8%.
Motley Fool contributor Tristan Harrison owns shares of Centuria Industrial REIT.
Life360 Inc
What it does: Life360 is a family connection and safety company. Its category-leading mobile app and Tile tracking devices allow users to stay connected to the people, pets, and things they care about most with a range of services. At the last count, Life360 was serving approximately 76.9 million monthly active users (MAU) across more than 170 countries.
By James Mickleboro: I think a recent pullback in the Life360 share price has created a buying opportunity for investors ahead of earnings season. Particularly given there is a reasonably high probability that the high-flying tech stock will deliver another stellar result in February. If that transpires, there's a fair chance that Life360 could soon be added to the illustrious S&P/ASX 100 Index (ASX: XTO).
Bell Potter believes this could be the case. When naming Life360 as one of its top tech picks for 2025, the broker said:
The next potential catalysts are when Life360 releases its Q4/2024 result in February – we expect a strong result towards the upper end of the guidance ranges – and the S&P/ASX index rebalance in March where we see a good chance Life360 will be added to the Top 100.
Bell Potter also highlights that Life360's paying-subscriber penetration rate is currently 10%. This is well short of management's long-term target of 30%, which means there is "the potential for the paying subscriber base to triple from here."
Together with its ad business, which aims to monetise its free users, Life360 looks well-positioned for long-term growth.
The broker currently has a buy rating and a $26.75 price target on Life360 shares.
Motley Fool contributor James Mickleboro owns shares of Life360 Inc.
Woolworths Group Ltd
What it does: Woolworths is a company we'd all be familiar with. It owns the largest and most popular chain of supermarkets in the country, as well as the discount Big W chain.
By Sebastian Bowen: Of all the ASX 200 blue-chip shares, I think Woolworths is the stock that is most primed for an earnings bump next month. Woolworths shares were battered over 2024. There was the poorly managed departure of longtime CEO Bradford Banducci for starters.
But it was arguably Woolworths' earnings reports that really spooked investors. These showed Woolies losing considerable market share to arch-rival Coles Group Ltd (ASX: COL).
As a result, the Woolworths share price went backwards by 18% in a year that saw the ASX 200 gain 7.5%.
However, I believe if Woolworths can show it has stemmed the bleeding next month, its shares have the potential to bounce back with a vengeance. This is not a done deal, mind you.
However, the company is currently trading at its lowest earnings multiple in years. If investor confidence in Woolworths returns, I envision a big post-earnings move for this company.
Motley Fool contributor Sebastian Bowen does not own shares of Woolworths Group Ltd or Coles Group Ltd.
ResMed Inc
What it does: ResMed develops, manufactures, and distributes cloud-connected medical devices to help people with sleep apnoea, chronic obstructive pulmonary disease, and other chronic diseases. The company has more than 24.5 million devices on the market spanning 140 countries.
By Bernd Struben: The ResMed share price gained more than 42% in 2024, and I believe the company is well-placed to outperform again in 2025. ResMed is scheduled to report its Q2 FY 2025 earnings after market close on 30 January.
The company reported its Q1 FY 2025 results on 25 October. For the three months to 30 September, ResMed reported revenue of US$1.225 billion, up 11% from Q1 FY 2024. Manufacturing efficiencies, component cost improvements, and an increase in average selling prices helped drive an impressive 4.20% increase in gross margins to 58.6%. Net income was up 42% year on year to US$311 million.
ResMed shares closed up 5.9% on the day it reported. I'll be looking for another uptick in income in the upcoming quarterly report.
Atop potential share price gains, ResMed shares trade on a slender 0.6% unfranked trailing dividend yield.
Motley Fool contributor Bernd Struben does not own shares of ResMed Inc.
BHP Group Ltd
What it does: BHP Group is the world's largest mining company by market capitalisation. Its focus is largely on the production of iron ore, coal and copper. It operates in 90 locations worldwide, including Australia, the US, Canada, and Chile.
By Aaron Bell: Perhaps a less 'sexy' pick than some under-the-radar penny stock, the rationale behind my stock recommendation is simply the opportunity to buy a world-class asset at a discount.
BHP shares fell 21.5% in 2024 on the back of shifting demand from the Chinese market and low iron ore prices.
Although the bounce back might not be immediate, I think investors will see too much value in this blue-chip stock to not snap it up in the near future.
This sentiment is supported by MPC Markets and Morgan Stanley, which both have it listed as a 'buy'.
Timing the trough to perfection isn't the play here, as you can scoop up Australia's second-largest company by market cap and a vital player in the national economy at a discount right now.
An operational review is due out from BHP this Tuesday, and its half-year report is scheduled for 18 February. Both updates should provide further insight into what's to come this year for the ASX 200 mining giant.
Motley Fool contributor Aaron Bell owns shares of BHP Group Ltd.
The post Top ASX shares to buy before the February earnings season appeared first on The Motley Fool Australia.
The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and ResMed. The Motley Fool Australia has positions in and has recommended Coles Group and ResMed. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2025