#stocks to watch


Analysts give their top stocks to watch this year

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At last investors can put the 2015-16 financial year behind them and concentrate on 2016-17 when Australian companies are expected to start lifting profits once more.

Better still, while the year just ended may have been lacklustre overall for listed companies – and a good deal less than lacklustre for some – the recent reporting season has thrown up several stocks that warrant placement on shareholders’ radar screens.

The year to June 30 was “not great” for corporate profits, in the words of Shane Oliver, head of investment strategy and chief economist at AMP Capital.

Earnings per share tumbled about 8 per cent, driven by a 47 per cent slump in resources profits and a 4 per cent decline in bank profits.

Credit Suisse analyst Richard Hitchens notes that revenue growth was “very hard” to come by, while the trend for cost cutting dried up, taking a toll on margins.

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But this year should be a better story.

As Oliver notes, across the market as a whole profits are expected to rise about 8 per cent, thanks to the improved outlook for the resources sector, higher commodity prices, improved supply conditions and cost cutting.

Several companies whose top line is dependent on the health of the Australian economy complained that the drawn-out election campaign dented consumer confidence in the June quarter, which should augur well for the current year.

Further, companies in the S
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