Royston Wild: St. Modwen Properties
The release of full-year financials on Tuesday, February 4 could well light a fire under the St. Modwen Properties (LSE: SMP) share price.
A steady stream of positive updates from across the housebuilding sector leads me to believe that a perky trading statement from St. Modwen Homes could be coming. Incidentally, sales volumes here jumped 25% last year, at the upper end of guidance. Investors should also look out for signs of a ‘Boris Bounce’ at the company’s Industrial & Logistics division in that forthcoming release.
St. Modwen’s share price has risen roughly 20% over the past 12 months yet it still trades on a low forward PEG ratio of 0.9 times. I believe that this provides the scope for more meaty gains in the not-too-distant future.
Royston Wild does not own shares in St. Modwen Properties.
Rupert Hargreaves: Sirius Real Estate
Recent trading updates from Sirius Real Estate (LSE: SRE) show that this company is firing on all cylinders. The operator of branded business parks in Germany has been struggling to keep up with tenants’ demand for new properties.
In November, the firm announced that it would spend €170m on acquisitions to meet this demand. So far, management has deployed €98m of this capital. Further purchases are planned throughout 2020.
Over the past six years, Sirius’s book value per share has grown at a compound annual rate of 10%, dragging the share price higher. A dividend yield of 3.6% has also boosted returns.
It looks as if this trend is set to continue considering the company’s acquisition pipeline.
Rupert Hargreaves does not own shares in Sirius Real Estate.
Manika Premsingh: Fevertree Drinks
AIM-listed Fevertree Drinks (LSE: FEVR) saw a dramatic drop of 25%+ from the previous close in late January after it announced its trading update. There’s indeed room for disappointment here, but I believe the extent of share price fall is disproportionately high. Here’s why.
The tonic maker’s UK sales might have declined in 2019, but the past year was exceptionally challenging for the UK. It’s hardly surprising that consumption spending was hit. Moreover, FEVR’s worldwide revenue is still up by almost 10%. The company’s also expecting lower earnings. But that’s an exception, not the rule. It’s reported healthy earnings increase in the past few years.
I reckon the share price will start rising soon enough, making this a perfect time to buy the stock.
Manika Premsingh has no position in Fevertree Drinks
Kevin Godbold: Sage
FTSE 100 company Sage (LSE: SGE) posted weaker earnings during 2018 and 2019 and the share price dropped back. But cash flow rose through the period, and the directors continued to push up the dividend a little each year.
The well-known provider of integrated accounting, payroll, and payments solutions is engaged in a process of migrating its customers to its cloud-based solution and the transition is going well.
This firm enjoys sticky earnings from its subscription business model, which powers cash inflow and the progressive dividend policy. I reckon the shares look set to break higher, perhaps during February and beyond.
Kevin Godbold has no position in Sage.
Edward Sheldon: Imperial Brands
My top stock for February is tobacco giant Imperial Brands (LSE: IMB). At the time of writing, it trades on a forward-looking P/E ratio of 7.3 and sports a prospective dividend yield of 11%.
There are a few reasons I believe Imperial looks interesting right now. Firstly, there are signs that value investing is coming back into focus. Given Imperial’s rock-bottom valuation, I think the stock could become more popular if the shift towards value persists. Secondly, sentiment towards the tobacco sector appears to be improving a little. Third, top-level directors continue to buy the stock, which indicates they’re confident about the future.
Of course, there are risks to the investment case here. However, overall, I believe the risk/reward proposition is attractive.
Edward Sheldon owns shares in Imperial Brands.
Tezcan Gecgil: Aviva
Aviva (LSE: AV) offers life and general insurance along with asset management products and services. Its share price has continued to underwhelm over the past several years, putting it on the radar as both a value and yield play for me.
The business provides investors with an enticing 7.3% dividend yield and the share price of about 410p throws up a trailing P/E ratio just over 7. On the other hand, the average industry P/E stands around 12.
Many analysts are hopeful that 2020 will indeed be the year management further improves the balance sheet and puts the company en route to robust earnings growth.
Tezcan Gecgil does not own shares in Aviva.
Andy Ross: BAE Systems
Ahead of full-year results coming during February, I think the BAE Systems (LSE: BA) share price should do well.
Tensions in the Middle East are rising and this could drive up defence spending – especially in the US.
The defence company has also announced major acquisitions, which could keep investor interest in the share high over the next couple of months. The biggest was the purchase of Collins Aerospace’s Military GPS business, for $1.9bn.
The share price has been doing well over the last month and I expect that momentum to continue.
Andy Ross does not own shares in BAE Systems.
Roland Head: Rank Group
I’ve selected Rank Group (LSE: RNK) as my top pick for February. This FTSE 250 firm owns Grosvenor Casinos and Mecca Bingo, as well as several online operations.
Rank shares have performed strongly in recent months. In January the company upgraded its profit guidance for the current year by 12% after reporting strong trading online and at Grosvenor Casinos.
I’m also encouraged by recent director buying — chief executive John O’Reilly spent almost £200,000 on stock in November.
The shares looks reasonably priced to me, on about 14 times forecast earnings. I reckon further gains are likely.
Roland Head does not own shares in Rank Group.
Kirsteen Mackay: Legal & General
International financial services company Legal & General (LSE:LGEN) has seen its share price rise over 21% in the past year.
This £17bn FTSE 100 giant has a price-to-earnings ratio of 9 and earnings per share are 32p. It has a nice dividend yield of almost 5.5%.
The Legal & General share price has increased by over 21% in the past year. I think this may be because of its high exposure to pensions and life insurance, both of which are increasingly popular as people live longer. It is also an innovator in the low-cost tracker fund space, which has been a popular alternative to buying individual stocks in uncertain times.
Kirsteen does not own shares in Legal & General.
Peter Stephens: Imperial Brands
With a dividend yield of over 11%, Imperial Brands (LSE: IMB) could be an appealing stock for income-seeking investors. Although its recent updates have shown a mixed performance – especially from its next-generation products – it is forecast to produce net profit growth in the next financial year.
The company’s plans to refresh its management team could bring a strategy change that causes a degree of instability in the short run. However, with a price-to-earnings (P/E) ratio of just 7, its risk/reward ratio appears to be highly attractive at a time when stock market sentiment is on the decline.
Peter Stephens owns shares in Imperial Brands.
Jonathan Smith: Fevertree Drinks
The Fevertree (LSE: FEVR) share price garnered a lot of coverage in January due to a disappointing trading update that saw the share price fall significantly.
I see this as a good buying opportunity, with the share price at levels not seen in almost three years. Fundamentally, the business is still due to grow revenues by 10% year on year, and is seeing double-digit growth in the US and Europe.
Even with sensitivity to the UK economy, this could act as a plus for the stock this year if a strong Brexit trade deal is pulled off.
Jonathan Smith does not own shares in Fevertree.
Paul Summers: Central Asia Metals
AIM-listed copper miner Central Asia Metals (LSE: CAML) may be worth a closer look. Shares in the mid-cap haven’t been on sparkling form of late, but better news on global growth and/or an improvement in relations between the US and China could see commodity prices rebound strongly.
Moreover, the business appears to be ticking along nicely. In its latest operations report, management reflected on “another strong year of production” in which guidance for copper was exceeded. The company is also tackling its debt pile, repaying $36.1m over the course of 2019.
CAML’s shares currently trade at 9 times forecast FY20 earnings and come with a chunky forecast 6.9% yield, covered 1.7 times by profits. The latter could be adequate compensation while (risk-tolerant) holders await a recovery in the share price.
Paul Summers has no position in Central Asia Metals
