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Best British shares for May 2020

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Scene depicting the City of London, home of the FTSE 100
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We asked our freelance writers to share the best British shares they’d buy in the month of May. Here’s what they chose:

Edward Sheldon: Rightmove

My best British share for May is property website company Rightmove (LSE: RMV). The FTSE 100 stock has fallen a long way in the recent stock market crash, and at the time of writing is 34% below its 52-week high.

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Of course, in the short-term, Rightmove’s profits are going to take a big hit as a result of coronavirus disruption. According to property consultancy Knight Frank, over 500,000 UK home sales could be abandoned this year.

However, the long-term growth story remains attractive, in my opinion. As the market leader in the property website space, the company is well-positioned for growth in a world that is becoming increasingly digital.

Edward Sheldon owns shares in Rightmove.

Rupert Hargreaves: Boohoo Group

It’s only business as usual for a handful of British shares right now. One of those companies is online clothing retailer Boohoo (LSE: BOO)

According to Boohoo’s latest trading update, business is booming. What’s more, the firm has plenty of cash in the bank to keep the lights on through this turbulent period.

Boohoo’s strengths will allow management to take advantage of any opportunities that come the company’s way. Indeed, management has already declared that the firm is looking for acquisition targets in the market.

This suggests that Boohoo can weather the crisis and come out stronger on the other side. As such, now could be a good time for investors to buy into this UK fashion success story.

Rupert Hargreaves does not own shares in Boohoo.

Tom Rodgers: Team17

One of the sectors to profit most from a UK-wide lockdown is video gaming. And Team17 (LSE: TM17) is the best of the field, in my opinion. Look no further than record profits up 49% from 2019 to £29.5m, improved margins from the shift away from physical game copies to digital downloads, no debt, and sales flying up 44% to £61.8m.

CEO Debbie Bestwick is an industry pioneer, and has added several significant non-exec directors to drive the businesses forward faster, including Softcat chair Martin Hellawell, Plus500 chair Penny Judd and ex-Ladbrokes chief exec Chris Bell. It’s my top pick for May 2020.

Tom Rodgers owns shares in Team17.

Matthew Dumigan: Taylor Wimpey

Taylor Wimpey‘s (LSE: TW) share price took a beating in the stock market crash and still comes in around 30% down on mid-February highs.

However, the leading British house-builder has recently confirmed that it will commence a phased return to construction in May. Moreover, the company reports that orders for new homes are rising, with prices comparable to those prior to the lockdown.

While the long-term outlook for the UK property market remains favourable, with low interest rates and a housing shortage, I’d buy bargain shares in Taylor Wimpey this May, expecting attractive future returns.

Matthew Dumigan does not own shares in Taylor Wimpey.

Tezcan Gecgil: Cranswick

My best British share for May is pork-to-poultry food producer Cranswick (LSE: CWK).  The group also has increasing non-meat activities and a booming export business.

And what a performer this FTSE 250 member has been. Year-to-date it is up over 10%. But that number would tell only half the story. If you had invested £1,000 into CWK stock in late April 2015, you would now have about £2,620.

And that juicy return does not include the annual dividend or the reinvestment of that passive income. The current yield stands at 1.5%.

Although the forward P/E of 24.6 is a bit on the expensive side, the P/S ratio of 1.3 gives me confidence that the price may continue to sizzle. I’d buy the dips.

Tezcan Gecgil does not own shares in Cranswick.

Andy Ross: Admiral

In line with what I said this time last month, I’m sticking with defensive, value British shares in this uncertain market. One example is Admiral (LSE: ADM) which as an insurer has a degree of protection for its earnings.

The group hit the headlines recently, announcing a £25 refund to its motor insurance customers. The £110m cost might not seem ideal for investors but it’s part of the group’s positive response to Covid-19 and I think shows the group cares about customers. The insurer has been growing profits and the dividend and I think that makes it a good investment, especially in the current environment.

Andy Ross owns shares in Admiral.

Kevin Godbold: Smith & Nephew

Global medical technology stock Smith & Nephew (LSE: SN) trades around 20% below its February peak as I write. Yet it bounced back from its coronavirus low in mid-March and has been consolidating for some time.

At the end of March, the company revealed many operations continue. Albeit after the directors made the usual precautions and adaptations for the pandemic

Those factors combine with the firm’s long history of growing cash flow to make the share appealing to me. I reckon it has a decent chance of performing well through May and beyond as lock-downs begin to unwind around the world.

Kevin Godbold does not own shares in Smith & Nephew.

Rachael FitzGerald-Finch: Tate &Lyle

A likely looming recession and a depleted ISA calls for a defensive stock that will likely continue to pay dependable dividends. For me, Tate & Lyle (LSE: TATE) is an excellent candidate. Food is always an essential good, even in bear markets.

Tate’s stock has grown 75% over the last 10 years and is currently outperforming the FTSE 250. The food and beverage ingredients manufacturer has refocused its goals and is now boasting more efficient operations.

A juicy 4.4% yield and good dividend cover is an attractive prospect. And especially so since the firm has never missed a payment. Tate & Lyle is a predictable but growing business with a sustainable dividend. Exactly what my ISA needs.

Rachael FitzGerald-Finch does not hold shares in Tate & Lyle.

Roland Head: WPP

As the end of the coronavirus lockdown starts to seem more likely, I think advertising giant WPP (LSE: WPP) could be a bargain buy. This FTSE 100 stock has been battered by this year’s stock market crash, falling by nearly 50%.

However, WPP had £3bn of cash on hand at the end of 2019. This should support the business through this difficult period. When lockdown ends, I expect ad spending to rise as companies aim to kick start their businesses.

WPP shares now trade on less than eight times forecast earnings. I think this is a great chance to buy.

Roland Head owns shares of WPP.

Jonathan Smith: BP

So far this year, the BP (LSE: BP) share price is down around 35%. A mix of the Covid-19 pandemic supply disruption and a falling oil price have been mostly to blame. The revised outlook now gives me confidence in buying into the share price.

The oil governing body (OPEC) are looking at supply cuts which should boost the oil price. With many countries looking to ease lock down measures next week, demand should boost revenue for BP at both a retail and wholesale level.

Aside from pure share price appreciation potential, the dividend yield currently sits at a juicy 10.8%, with no cut announced.

Jonathan Smith has no position in BP.

Royston Wild: Tate & Lyle

Tate & Lyle (LSE: TATE) is an attractively priced income share I think is one of the best British shares for May. Full-year results are due on Thursday the 21st and I reckon a rock-solid update is in the offing.

Food sales have gone through the roof as citizens the world over have stocked up on essentials following the Covid-19 outbreak. It’s a phenomenon that should keep Tate & Lyle’s long record of annual dividend growth supported, in contrast to the dividend cuts of many other UK-listed stocks. But of course the FTSE 250 firm’s trading had been “strong” even before the pandemic emerged. This is a share which is in great shape beyond 2020.

At current prices Tate & Lyle trades on a forward P/E ratio of 13 times. It boasts an inflation-mashing 4.5% dividend yield, too. It’s a brilliant May buy, in my opinion.

Royston Wild does not own shares in Tate & Lyle.

G A Chester: Capital Gearing Trust

I named Capital Gearing Trust (LSE: CGT) my top buy for 2020. As we approach the halfway stage in what is proving to be a tumultuous year, it remains my pick of choice.

The company’s dual objectives are to preserve shareholders’ real wealth, and to achieve absolute total return over the medium to longer term. It currently has 36% of its assets in equities/funds, with the remainder in cash and lower-risk assets such as index-linked bonds.

It’s never going to blow the doors off when markets are on a tear. However, it’s delivered a slow-and-steady-wins-the-race 8% annualised return over the last two decades.

G A Chester has no position in Capital Gearing Trust.

Paul Summers: IG Group

Nice as recent bounce has been, I’m still in risk-off mode when it comes to selecting stocks. My best British share for May is therefore online trading provider IG Group (LSE: IGG) — a stock that should do well even if markets head south again.

After a tricky few years, things are looking increasingly positive for the FTSE 250 member. Last week’s trading update spoke of “exceptionally high” revenue and the firm receiving record applications to use its platform.

Aside from being a play on further market volatility, IG also boasts great income credentials. At a time when dividends are being cancelled left, right and centre, it still plans to return 43.2p per share to holders this year. That’s a superb 5.7% yield. 

Paul Summers owns shares in IG Group.

Peter Stephens: Associated British Food

Associated British Food (LSE: ABF) recently reported that sales at its Primark stores have fallen from £650m per month to zero due to store closures caused by coronavirus.

However, the remainder of the business could mitigate the overall impact of coronavirus on its financial performance. Furthermore, ABF has cash of around £1.5bn. This should provide it with the financial means to survive a challenging economic period over the coming months.

The company’s share price has declined by over 25% since the start of the year. It may face an uncertain short-term outlook, but could deliver a capital growth over the long run.

Peter Stephens does not own shares in Associated British Food.

Manika Premsingh: RELX

The FTSE 100 analytics and decision tools provider, RELX (LSE: REL) posted a healthy trading update in April. For segments accounting for 84% of its 2019 revenues, the increase in 2020’s first quarter is actually improved compared to last year. This is a significant plus at the time of Covid-19.

RELX is financially sound, with manageable debt. It’s price to earnings (P/E) ratio at 23.2x could appear comparatively high, but that’s partly because its share price has recovered to a large extent already. Moreover, its P/E is in line with that of other defensive stocks. With its long-term potential and its price still relatively subdued, it’s my best British share to buy in May.    

Manika Premsingh has no position in RELX.

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The Motley Fool UK has recommended Admiral Group, Associated British Foods, boohoo group, RELX, Rightmove, and Softcat. 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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