Two stocks with high earnings quality

Romano Sala-Tenna, Portfolio Manager at Katana Asset Management, singles out Wesfarmers as a stock with high earnings quality, and particularly the Bunnings segment of the business. “Over the past ten years or so it’s been consistently growing revenue, margin, and profit.” Some other positive attributes he identifies were that performance drivers are in management’s control, they have a diversified client base. “That’s one company we’re prepared to pay a premium for.” In this video, he explains why despite having high earnings quality, Domino’s Pizza is ‘priced to perfection’ and the risks this entails. As a bonus also includes two stocks with the potential to surprise this earnings season.