Stocks from ASX50 index to watch out for

Highlights:

• Benchmark index S&P/ASX 200 was up 45.30 points at 2:58 PM AEST.
• The index has been taking cues from the upbeat Wall Street stocks.
• By 3:00 PM AEST, A-REIT was the top performing sector, up 1.36%.

The S&P/ASX 200 (INDEXASX:XJO), the Australian stock market’s benchmark index was up 0.65% to 7,009.80 at 2:58 PM AEST on Tuesday (13 September 2022). ASX 200 was above its 20-day moving average. Over the last five trading sessions, the index has surged 2.69% and dropped 1.95% in the past six months. On a year-to-date basis, it has lost 7.64%, and the yearly fall is 5.59%.

Along with the broader market index, nine out of eleven significant sectors were in the green territory. A-REIT evolved as the top-performing sector, gaining 1.36% (at 3:00 PM AEST). Health Care sector was the worst performing sector; it reported a fall of 1.17% around the same time.  

Today, in this piece, Kalkine Media has discussed the respective performances of some stocks belonging to the ASX50 index along with their outlooks for the financial year 2023 (FY23). The stocks featured are Wesfarmers Limited, Coles Group Limited, Woolworths Group Limited, Endeavour Limited and Transurban Limited.

Wesfarmers Limited (ASX:WES)

Wesfarmers is a diversified financial company. Its’ work portfolio ranges from office supplies to chemicals and fertilisers. FY22 was not positive for the group because of the disruptions created by Covid-19. During FY22, EBIT dropped 3.8%, and net profit after tax sank 2.9%.

When it comes to the outlook for FY23, Wesfarmers has stated that a solid balance sheet along with financial discipline would support the investment in the company’s operation and also offer the capacity to take advantage of value-accretive opportunities in future.

Higher living costs and inflation has created pressure on the Australian economy, which includes household budgets. The company is actively engaged in managing inflation, sourcing capabilities to reduce the effect of cost increases and leverage its scale.

Reportedly, Wesfarmers would invest in its current operations and develop platforms to ensure long-term growth. The expected net capital expenditure is AU$1,000 million to AU$1,250 million for FY23.

On Tuesday, at 3:33 PM AEST, the stock was up 1.421% at AU$48.500 per share on ASX.

Coles Group Limited (ASX:COL)

Image source: © Lucidwaters | Megapixl.com

Coles is an Australian retailer that claims to process over 20 million customer transactions on a weekly basis. The company managed to report a 4.3% growth in the net profit after tax during the FY22 despite flooding, increased absenteeism and Covid-19 related restrictions.

Coles said that in FY23, the sales growth in the supermarket segment would be cycling lockdowns during the 1HFY22 (first half of FY22) and price inflation during the 2HFY22. Covid-19 related lockdowns are also expected to impact the sales growth of liquor.

In the Express business, the company expects a positive impact on sales and fuel volumes due to increased mobility. The scale of benefit will be dependent upon fuel prices.

The expected corporate cost for FY23 is around AU$95 million. The expected property earnings are below what the company has recorded in FY22.

To mitigate the impact of increasing interest rates and inflation, the company has already locked the prices of 1,168 products across online and supermarkets until at least 31 January 2023.

In FY23, Coles expect to open around 20 new stores, renew 40 stores in Liquor and Supermarkets and renew stores at a level similar to FY22.

Coles shares, at 3:30 PM AEST, were quoted at AU$17.310 apiece, up 0.406% on ASX today.

Woolworths Group Limited (ASX:WOW)

Woolworths is an Australian retailer that offers speciality, general merchandise and food retailing services through chain store operations. Due to Covid-19 driven pandemic, supply chain-related restrictions, and increased absenteeism rate, the group’s EBIT dropped by 2.7% to AU$2,690 million.

Brad Banducci, CEO, Woolworths Group, provided the outlook for FY23. Banducci said that in the first eight weeks of FY23, total sales were down by 0.5% from the previous period. However, the three-year CAGR was strong at 5%.

The organisation expects a reduction in the Covid-19 related costs when compared to FY22 as the business is gaining momentum and customer behaviour is beginning to normalise.

Woolworths’ CEO shared that there are no signs that food inflation would normalise in the short term. Therefore, the company focuses on offering value to its customers and ensuring they can get their Woolies worth.

The group expects to report a decline in its 1HFY23 New Zealand Food EBIT because of team absenteeism and ongoing disruptions.

Meanwhile, Woolworths shares were trading 0.376% higher at AU$36.025 per share at 3:35 PM AEST today.

Endeavour Group Limited (ASX:EDV)

Endeavour is an Australian drinks retailer of products like liquor. The company also operates numerous licenced hospitality venues. During FY22, the group’s EBIT grew 2.8%, and profit after tax increased 11.2%. Reportedly, the operating cash inflow reduced from AU$1,114 million to AU$949 million.

While sharing the financial results, Endeavour said that it witnessed continuous recovery in Hotel’s trading results. The group expects that hospitality and retail drinks will return to the normal course in FY23. The first seven weeks of trading indicate that return to events and social connection are positive from the company’s perspective; however, the long-term performance is expected to be influenced by higher absenteeism rate, inflation and supply chain disruption.

The strategic priorities for FY23 are to focus on developing the customer offer, building a partnership to drive business growth and operating an efficient business.

At 3:35 PM AEST, the stock EDV was quoted at AU$7.420 per share, up 0.405%.

Transurban Limited (ASX:TCL)

Image source: © Piter2121 | Megapixl.com

Transurban is a toll-road operator that is engaged in building and designing new roads and researching new road safety and vehicle technology. The company operates toll roads in Brisbane, Sydney, Melbourne, Greater Washington and Montreal.

While sharing the financial results for 2022 (FY22), Transurban shared that it expects growth in traffic which will be supported by long-term structural trends. The company expects an escalation in inflation-linked toll with near-term interest rate protection.

The company said that it would continuously enhance its operations, data and technology capabilities to take advantage of growth opportunities. In addition to this, the company said that the expected distribution for FY23 is 53 cents per share. Almost a 30% growth in the previous year (FY22).

The stock at 3:40 PM AEST, was at AU$13.870 per share, down 0.072%.