The story of this reporting season will be a familiar one: companies with offshore earnings or exposed to the booming housing market doing well, while miners and the companies that service them suffer.
Morningstar head of Australasia equity research, Peter Warnes said that with the Australian economy plodding along at sub-standard growth rates, it was tough for most companies to grow.
That meant revenue was likely to be flat for most companies reporting their annual results during the August reporting season, though earnings and profits may have improved.
He said cost cutting and low interest rates would again be a major driver of profit growth, a theme that has been constant for several years now.
Overall though, he's expecting a lacklustre reporting season, with a few bright spots.
"We're not expecting anything spectacular... but I think the market has been well and truly conditioned for a moderate reporting season," he said.
The best performers, he said will be companies that generate a substantial amount of their earnings overseas, thanks in part to the lower Australian dollar.
Healthcare stocks, in particular, are expected to do well.
Morningstar expects protective gloves and condoms maker Ansell and hearing implants group Cochlear to lift their net profit more than 50 per cent and is forecasting profit growth of 27 per cent biotech giant CSL and 19 per cent for hospitals owner Ramsay Health Care.
"As a group, that would be one of the strongest sectors," he said.
Anyone exposed to the booming housing markets in Sydney and Melbourne are also likely to be winners.
Mr Warnes expects building materials maker Boral to lift its profit by more than 40 per cent and thinks retailers of household goods, like Harvey Norman, should also do well.
But he said expects a series of subdued results from elsewhere in the retail sector, including giants Woolworths and Wesfarmers, due in part of weak consumer sentiment.
Meanwhile, Morningstar expects single digit profit growth and modest dividend increases for two investor favourites: Telstra and the Commonwealth Bank.
And resources companies are again expected to be among the weakest performers, with the slide in iron ore, oil and other commodities weighing heavily on profits.
BHP Billiton is expected to report a 30 per cent slide in its full year profit after a series of writedowns, but Mr Warnes says mining services companies will fare even worse.
But that is unlikely to surprise anyone.
"Mining services will be under the whip but the market is certainly well prepared for those." he said.
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