Top shares for September 2019

We asked our freelance writers to share their top stock picks for the month.

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Kevin Godbold: British American Tobacco

With the shares at 3,026p, British American Tobacco (LSE: BATS) trades on a forward-looking earnings multiple below nine for 2020, and the anticipated dividend yield is near 7.5%.

BATS looks like it’s out of favour with investors to me. But City analysts expect a rising dividend ahead. And in August’s half-year report, the directors said the firm is on track to achieve around 40% revenue growth per year from new categories of product, which looks set to more than offset ongoing declines from cigarette volumes.

I think the valuation is ripe for an upwards readjustment, perhaps through September and beyond. 

Kevin Godbold does not own shares in British American Tobacco.

Tom Rodgers: Greencoat UK Wind

Greencoat UK Wind (LSE: UKW) invests in and owns 35 UK wind farms, concentrated onshore in England and Scotland.

Its 25% debt-to-assets ratio is low considering the FTSE 250 firm spends hundreds of millions on buyouts, and there is huge potential here. The UK government is now committed to net zero emissions by 2050 and wind makes up 17% of the renewables market. 

UKW shares are also backed by a 4.8% dividend yield, covered 1.7x by earnings. Shareholder returns have also outperformed all its market rivals since 2013. I think it’s a cracking buy.

Tom Rodgers owns shares in Greencoat UK Wind.

Manika Premsingh: Just Eat

FTSE 100 share Just Eat (LSE: JE) saw a sharp spike in its share price in late July following a merger announcement with, which will make it the a largest food delivery service in the world. With this as the backdrop, it sounds contrarian to buy the shares now, but it’s worth noting that the price has since dipped in line with the broader Footsie decline. It’s now trading at 15% below its highest level in five years.

I reckon that as equity markets stabilise and investor confidence returns, this company will see a sharper run up in price than other FTSE 100 ones, given the growth potential now available to it. It might be best to buy it now.

Manika Premsingh has no position in Just Eat.

Karl Loomes: AstraZeneca

Suffering a setback to its Imfinzi lung cancer treatment towards the end of August, I believe the underlying fundamentals of AstraZeneca (LSE: AZN) still make it a strong investment.

Unlike many competitors, Astra has been showing a proven business model, particularly in China, to offset losses associated with generic drugs after patents run out. The result has been strong growth in the region and – combined with its drug portfolio – global sales, revenue and profits have all been climbing as a result. The share price is certainly not its cheapest, but I think we will be looking back at this level in a year’s time as a point when we should have bought.

Karl owns shares of AstraZeneca

Rupert Hargreaves: Future 

According to City estimates, profits at magazine publisher Future (LSE: FUTR) will surge more than 200% in 2019. This makes the firm one of the fastest-growing businesses in the FTSE 250, which is why I’m recommending it as my top stock for September. 

Based on current growth estimates, the stock is trading at a forward P/E of 26 – that’s hardly expensive considering the company’s projected growth. Earnings are set to jump another 12% next year, indicating a 2020 P/E of 23.

I’m excited to see what the future holds for this business as the company builds on its growth going forward. As Future was losing money until 2016, it does not offer much in the way of a dividend at present, but with profits set to surge during the next two years, that could be about to change…

Rupert Hargreaves has no position in Future.

Royston Wild: Highland Gold Mining

August’s proved to be a special month for Shanta Gold. It’s a share which I previously tipped because of an improving price outlook for the yellow metal, and I’m pleased to say that (as I type) the company’s value has risen around 20% since the turn of the month.

A worsening macroeconomic landscape means that there’s plenty more scope for bullion to gain ground, too, so why not play this trend through Highland Gold Mining (LSE: HGM), another top mining play?

The possibility of more metal price gains isn’t the only reason to buy Highland for September, though. Interims are slated for the 3rd and I’m excited to see what the company has to say for itself as production levels steadily improve and costs come down.

Oh, and right now Highland trades on an undemanding forward P/E ratio of 12.5 times, giving it ample space to rise in the coming weeks.

Royston Wild does not own shares in Highland Gold Mining or Shanta Gold.

Edward Sheldon: Legal & General Group

My top stock for September is financial services company Legal & General Group (LSE: LGEN).

After a strong start to the year, Legal & General shares have fallen over the last month as volatility has returned to equity markets. This has pushed the stock’s forward-looking P/E ratio down to around seven, while the dividend yield has risen to nearly 8%.

With the group delivering a solid set of half-year results in August, in which earnings per share were up 13% and the interim dividend was lifted 7%, I think the recent share price weakness has created an attractive buying opportunity for long-term investors.  

Edward Sheldon owns shares in Legal & General Group 

Ambrose O’Callaghan: Fresnillo

My top stock for September is Fresnillo (LSE: FRES). The spot price of silver has generated huge momentum in the month of August. This comes months after it had stagnated in gold’s shadow as investors have fled to safe havens.

Fresnillo is the top silver producer in the world, which makes it a highly attractive target in this environment. The stock was still down 26% year-over-year as of close on August 27, and shares were close to technically oversold territory. Fresnillo has room to run with the spot price of silver surging in the face of global economic anxiety.

September will be a big month in the lead up to the Brexit deadline, and Fresnillo offers nice value and exposure to silver.

Ambrose O’Callaghan has no position in Fresnillo.

Paul Summers: Unilever

September will likely be a pretty volatile month for markets. Regardless of whether a Brexit deal is agreed or not, I think most investors should be gravitating toward large stocks that don’t depend solely on the UK economy for their profits. 

My pick for next month is, therefore, Unilever (LSE: ULVR). As one of our biggest listed companies with exposure to markets all around the world, the Marmite-maker has the clout to survive whatever happens post-Halloween…

At 22 times forecast earnings, I suspect the current valuation reflects Unilever’s quality more than anything else. In contrast to some firms in the FTSE 100, the near-3% yield also looks secure.

Paul Summers has no position in Unilever

Kirsteen Mackay: John Wood Group

When John Wood Group (LSE: WG) acquired Amec in 2017 for £2.2bn, its debt level didn’t sit well with investors and the share price now sits close to its 52-week low.

Last week Wood Group announced it sold its nuclear business to Jacobs for £250m. This news was welcomed by shareholders as it helps bring the debt to a more manageable level.

The company reported a pre-tax profit of $62.2m for the first six months of 2019 from a $25.3m loss in the same period in 2018.

Management believes the group remains well positioned for growth. It has a price-to-earnings ratio of 45.9p and earnings per share of 8.5p. Its dividend yield is 7%. I think this share price will rise very soon.

Kirsteen Mackay owns no share mentioned.

Fiona Leake: Just Eat

Just Eat (LSE: JE) shares have sky-rocketed 25% at the end of July thanks to the huge share merger with Many have described the soon to be combined company as a huge “European powerhouse”. It certainly is very easy to see why, as the two companies combined received 360m orders worth €7.3bn in 2018.

Furthermore, Just Eat has already seen a 21% rise in orders during the first half of this year. On top of this, revenue has also risen by 30%. I truly believe that September could be the time to invest as I think that the share price will only continue to rise. I would be very interested in what further success this merger could bring.

Fiona Leake does not own shares in Just Eat.

G A Chester: Smiths Group

I’m seeing exciting prospects at several companies that are planning to unlock value for investors by a sale or demerger of part of their business. Smiths Group (LSE: SMIN), a FTSE 100 industrial technologies conglomerate, is one such company.

It intends to demerge its medical division in the first half of 2020. I’m making it my top ‘buy’ this month, because its annual results are due on 20 September, and I think these could be a catalyst for rising investor interest in the stock. Management turned down a bid for the division last year that I reckon values the group at around 50% higher than its current market valuation.

G A Chester has no position in Smiths Group.

Roland Head: Go-Ahead Group

Bus and train operator Go-Ahead Group (LSE: GOG) has seen its share price rise by about 30% over the last year. Investors have been encouraged by strong trading and a return to profit growth, after a difficult couple of years.

The company is due to publish its full-year results in early September. I expect a strong set of figures, as June’s trading update confirmed revenue growth throughout the business.

Although Go-Ahead shares aren’t as cheap as they were, a price tag of 12 times forecast earnings still looks reasonable to me. I believe further gains are possible. In the meantime, the 4.8% yield provides a useful income.

Roland Head owns shares of Go-Ahead Group.

Stepan Lavrouk: Shaftesbury

When it comes to real estate, I have a simple rule – do not bet against property markets in centres of first-tier cities. It is for this reason that I am very positive on Shaftesbury (LSE: SHB).

This West End-focused REIT has a history of both outperforming its market and of dividend increases. Although it currently yields just 2%, I believe that management could make good on its track record and continue to increase its payouts. I also believe that its quality real estate portfolio will prove to be resilient even in the case of a no-deal Brexit, especially compared to the wider market.

Stepan Lavrouk does not own shares in Shaftesbury.

Peter Stephens: British Land Company

With Brexit contributing to weak investor sentiment towards commercial property stock British Land (LSE: BLND), there could be a buying opportunity on offer for long-term investors. The REIT currently trades on a P/B ratio of 0.5, which suggests that it has a wide margin of safety.

Of course, the company faces an uncertain future due to an ongoing shift towards online retailing. In response, it is pivoting towards flexible office space and build to rent opportunities that are set to mitigate the impact of a retail slowdown on its wider portfolio.

With a dividend yield of over 6%, British Land could offer good value for money and income investing appeal.

Peter Stephens owns shares in British Land.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended AstraZeneca, British Land Co, Fresnillo, and Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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