Top British stocks for January 2021

We asked our freelance writers to share their top British stocks for January, including Rio Tinto, Safestore and IG Group.

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We asked our freelance writers to share the top British stocks they’d buy in the month of January. Here’s what they chose:

Christopher Ruane: S4 Capital

I already own S4 Capital (LSE: SFOR) and picked up some more shares in December when it was close to record high prices.

Why would I do that? Doesn’t investment theory talk more positively about averaging a cost down than buying in near the top? The reason is I think the company has great momentum. It is only now being properly appreciated for what it is. S4 Capital is not just a holding company with a vision; it is a fast-growing digital ad platform with an impressive client roster. Its aggressive client acquisition plan and proven capabilities mean both revenue and profits are set to grow strongly.

Its steep price rise this year might suggest it is ready for a breather. But it is an energetically growing business, so I expect further price appreciation. I expect it to start 2021 with continued strong momentum.

Christopher Ruane owns shares in S4 Capital.

Rupert Hargreaves: ITV

Shares in ITV (LSE: ITV) have been on a roller coaster ride this year. At the end of March, the stock plunged as investors became concerned about the impact the pandemic would have on the broadcaster. 

However, shares in the business have recently started to rebound following encouraging signs the advertising market is beginning to recover. I reckon this improvement will continue into 2021, which should help power the stock’s run higher. 

Still, despite this development, management has not, as of yet, set a date for the resumption of the group’s dividend. Hopefully, that’ll change in the first half of 2021. That could be yet another catalyst, which is why it’s my top British stock for January. 

Rupert Hargreaves owns shares in ITV.

Royston Wild: Safestore Holdings

Self-storage demand in Britain continues to grow at an awesome pace. The likes of Safestore Holdings (LSE: SAFE) endured some trading difficulties during the coronavirus crisis. But strong revenues growth outside of Covid-19 lockdown periods illustrate the health of the underlying market. It’s a phenomenon which make UK shares like this such brilliant investments.

Safestore saw group turnover rise 5.4% in the three months to October, it said in its most recent update. It described occupancy for the full fiscal year as “strong” too. I’m eager to see what the self-storage giant’s next trading update on Thursday, January 14 will reveal.

City analysts reckon annual earnings here will rise 5% in fiscal 2021. There’s a strong chance that estimates could receive significant upgrades as the months roll on, in my opinion. And so I think it’s a very attractive buy irrespective of its chunky forward P/E ratio of 24 times.

Royston Wild does not own shares in Safestore Holdings.

Jonathan Smith: Auto Trader Group

The Auto Trader Group (LSE:AUTO) share price is almost back to where it started 2020. Recent half-year results release last month showed a strong demand for cars, with the business noting it to be 20% above the same levels from the prior year. It expressed that from July onwards (when lockdown restrictions were eased), operating profit was in line with previous years. Therefore, if we get a successful vaccine rollout over the coming six months, I think profitability for 2021 could beat expectations.

Jonathan Smith has no position in Auto Trader Group.

Tom Rodgers: IG Group

I’m betting on betting being supremely popular in the first month of the New Year, with Brexit, Covid-19 and ongoing dissent over the US election results all providing huge volatility for traders to exploit. That’s why I’d buy IG Group (LSE:IGG), the highly profitable UK stock, currency and commodities trading company.

Half-year 2020 revenues surged higher, as reported in December, up 66% to £416m, so we know volatile markets create cash for IG Group. A forward P/E of 14 is undemanding on these numbers and I’m especially swayed by a whopping 5.1% dividend yield, making IG Group my top British stock for January.

Tom Rodgers has no current position in IG Group.

Zaven Boyrazian: Oxford Biomedica

AstraZeneca’s Covid-19 vaccine is expected to be authorised before the end of the year. As the vaccine doesn’t require refrigeration of -70°C, storage and transportation are significantly cheaper. Therefore, it’s likely to be the most widely used vaccine once approved.

However, the real winner from this breakthrough is actually Oxford Biomedica (LSE:OXB). The biotech firm is heavily involved in the vaccine’s development & manufacture. It is set to earn £35m by the end of 2021, which is almost half of the total revenue for 2019!

With many other drugs in the pipeline, I think Oxford Biomedica is set to continue thriving for many years to come.

Zaven Boyrazian owns shares in Oxford Biomedica.

Kirsteen Mackay: Mondi 

I think Mondi (LSE:MNDI) will continue to do well in January. The packaging group has seen its share price rise by around 50% since the March market crash. Mondi’s price to earnings ratio is 12, earnings per share are £1.51 and its dividend yield is around 3%. It’s still a relatively cheap stock. Packaging demand is rising with the increase in ecommerce.

Mondi’s doing all the right things to meet ESG targets and received the prestigious recognition as being only one of 10 companies to achieve a triple A rating from the CDP.  

Kirsteen Mackay does not own shares in Mondi.

Roland Head: Centamin

FTSE 250 gold miner Centamin (LSE: CEY) hit a stumbling block last year when it ran into technical problems. The shares fell by up to 50%.

However, I’ve followed this business for a number of years and think this sell off may have gone too far. With the gold price at current levels, I expect Centamin to generate high profit margins and plenty of surplus cash next year, despite plans to increase spending.

I think Centamin is starting to look cheap. New dividend guidance indicates a yield of 5%. If the firm can deliver on its revised mining plan, I think it could be a top British stock to buy in January ahead of hopefully great performance in 2021.

Roland Head does not own any share mentioned.

Kevin Godbold: Smith & Nephew

FTSE 100 medical devices company Smith & Nephew (LSE: SN) suffered through the lockdowns because hospitals stopped doing many of their normal medical procedures. So, demand for the firm’s joint repair and other products plummeted. But with the arrival of Covid-19 vaccines, there’s a road back to normal services for hospitals. And already they are returning to their regular workloads. Smith & Nephew is seeing demand begin to ramp up again. Meanwhile, the stock market looks ahead. And City analysts expect earnings to increase by more than 50% next year. January may see the improving outlook move the share price.

Kevin Godbold does not own shares in Smith & Nephew.

Edward Sheldon: Unilever

My top share for January is consumer goods champion Unilever (LSE: ULVR). Its share price has pulled back recently on the back of sterling strength and I think this is an attractive entry point.

Unilever has made some interesting moves recently. In November, it announced that it had signed an agreement to acquire SmartyPants Vitamins, a US-based vitamin, mineral and supplement company. Then, in December, the company launched a line of pet care products in Brazil, which is projected to have over 100 million cats and dogs by 2030. These moves strike me as shrewd. Both vitamins and pet care are high-growth industries.  

All in all, I see a lot to like about Unilever as we start 2021.

Edward Sheldon owns shares in Unilever.

Paul Summers: On the Beach

Holiday operator On the Beach (LSE: OTB) is my top British stock for January.

While hurdles remain, the gradual distribution of coronavirus vaccines should allow the travel industry to begin recovering this year. Thanks to its flexible business model, lack of significant fixed costs and net cash, I think On the Beach is best placed to capitalise on this. Many families will surely prioritise a week or two in the sun in 2021 over buying the latest tech gadget.

Add in the fact that January tends to see small-caps outperform larger peers and I think On the Beach is a great contrarian play for UK investors. 

Paul Summers has no position in On the Beach

G A Chester: Alliance Pharma 

Alliance Pharma (LSE: APH) owns global top five scar treatment brand Kelo-cote, and around 80 other consumer healthcare products and prescription medicines. Revenue in the latter category has been dented this year by delays to routine treatments due to Covid-19. But I’m expecting a recovery in 2021. 

This should lead to a strong group performance, spearheaded by its fast-growing consumer healthcare brands. Its four ‘star’ products in this category — all acquired in the last five years — now account for over 45% of group revenue, and have significant international growth prospects. With management also actively reviewing further acquisition opportunities, I’m expecting strong investor interest through 2021. 

G A Chester has no position in Alliance Pharma.

Matthew Dumigan: Ashtead Group

After weathering the pandemic relatively well, Ashtead (LSE: AHT) shares have bounced back nicely since the stock market crash last February. Inevitably, earnings took a hit in the first quarter of 2020 as sales dried up, but second-quarter profits came in ahead of forecasts as rental revenue fell less than expected.  

What’s more, I think Ashtead is perfectly positioned to profit from the explosive growth potential of the US equipment rental market, which could gather momentum throughout 2021. Not to mention the benefit that potential fiscal stimulus encouraging building activity could have on the company’s share price. 

Matthew Dumigan does not own shares in Ashtead Group.

Jabran Khan: Clipper Logistics

Clipper Logistics (LSE:CLG) is a fast-growing value-added retail logistics firm that offers a wide range of services including e-fulfilment. Its client base includes M&S and ASOS

Due to the pandemic and restrictions, online shopping has soared and Clipper has benefited from this. December’s half-year results showed just how much it has benefitted with a 20% increase in revenue. 

Clipper’s share price is up over 100% in 2020 alone, making it a great candidate to be my top British stock for January. I expect CLG to continue to grow as new contract wins occur and online shopping becomes more prevalent than the traditional high-street shopping experience. 

Jabran Khan has no position in Clipper Logistics.

Harshil Patel: Games Workshop 

Investors in this Nottingham-based fantasy miniatures manufacturer have been on an incredible journey over the past few years. Momentum in the business remains strong, and despite its shares rising by approximately 80% in 2020, it is one of the top UK shares I’d consider adding to in January. 

The company is showing no signs of slowing down, in my opinion. It continues to regularly beat earnings forecasts and distributes surplus cash to shareholders as dividends.  

With market-leading quality metrics, Games Workshop (LSE: GAW) displays a high return on capital, strong cash flow generation, and an undemanding valuation.  

Harshil Patel owns shares in Games Workshop.

Manika Premsingh: Rio Tinto

With industrial metals’ prices on the upswing, FTSE 100 multi-commodity miners like Rio Tinto (LSE: RIO) are poised for gains. This is despite the upset caused by the pandemic.

When it releases its trading update in mid-January, I’d look out for how it has performed at this unusual time. Lower prices had impacted its previous results, so I’d think that the latest one would be better on that count.

I’d also look out for any forward looking statements to see how if and how long it expects the boom to continue. This will indicate how far its share price can continue to rise, which is presently at levels not seen since 2008.

Manika Premsingh has no position in Rio Tinto.

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 has recommended Alliance Pharma, ASOS, Auto Trader, Clipper Logistics, ITV, On The Beach, and Unilever. 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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