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Top British stocks for March 2021

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We asked our freelance writers to share the top British stocks they’d buy this March. Here’s what they chose:

Kevin Godbold: Smurfit Kappa

The FTSE 100‘s Smurfit Kappa (LSE: SKG) provides paper-based packaging solutions and occupies a niche supplying the needs of e-commerce. In February, chief executive Tony Smurfit said the outlook is “increasingly positive”.

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The business delivered a strong cash performance in 2020, as befits its defensive credentials. There’s a multi-year record of growth in cash flow and dividends. And last year the company raised a gross €660m via a share placing to “capitalise on structural drivers of growth”. I think the market may warm to the firm’s enhanced growth prospects, perhaps as soon as during March.

Kevin Godbold does not own shares in Smurfit Kappa.

Kirsteen Mackay: Travis Perkins

I think FTSE 250 company Travis Perkins (LSE: TPK) looks a top British stock for March. Construction is still under way in the UK and, as the country begins to reopen, activity should increase. As well as Travis Perkins Builders’ Merchants, the company operates Toolstation, Wickes, Keyline, BSS, City Plumbing and several more. 

Travis Perkins has a forward price-to-earnings ratio of 22, earnings per share are 49p, and it has a market cap of £3.7bn. It recently conducted a survey that showed tradespeople across the country are optimistic their workload will increase or remain the same throughout 2021. Its next earnings call is in March.  

Kirsteen Mackay does not own shares in Travis Perkins.

Christopher Ruane: Photo-Me International 

Photo-Me International (LSE: PHTM) continues to be in the doldrums. I think the increasing optimism about moving beyond lockdowns will benefit the vending machine company. The company has been reshaping its portfolio to reflect changed realities; the launderette business has good growth potential, for instance. Additionally, over the past year the CEO has bought over 19 million shares in the company.

The business outlook remains unstable and Photo-Me shares have been disappointing over the past few months. But they are more attractive to me now as I expect them to benefit from improved business prospects beyond the pandemic.

Christopher Ruane does not own shares in Photo-Me International.

Rupert Hargreaves: Royal Mail

Royal Mail’s (LSE: RMG) recovery over the past few months has caught many investors, including myself, by surprise. After a change in leadership last year, the firm has capitalised on the booming e-commerce market over the past 12 months. Parcel deliveries have exploded, and the company has had to take on more staff to meet demand.

If Royal Mail can capitalise on this expansion in 2021, I think its growth is only just getting started. Additional investment in its operations and development in the group’s international business may underpin strength in the stock for years to come. The firm is also likely to re-introduce its dividend as profits recover.

Rupert Hargreaves does not own shares in Royal Mail.

Paul Summers: Avon Rubber

Having now tumbled 35% from its share price peak in December 2020 following a contract delay, I think military equipment supplier Avon Rubber (LSE: AVON) warrants consideration. This is especially after January’s trading update stated that the company is confident of hitting targets for the current financial year due to “good order intake” across its portfolio.

Avon’s great growth credentials mean its stock is unlikely to ever be cheap in the traditional sense. However, it does possess many of the things I consider worth paying up for, including a bulletproof balance sheet and (pre-coronavirus) consistently good returns on capital. A ‘buy and forget’ strategy could prove lucrative for this top British stock beyond March.

Paul Summers has no position in Avon Rubber.

Jonathan Smith: Barclays

Barclays (LSE:BARC) recently released the full-year 2020 results. Although profit was down 30%, this was mostly driven by underperformance in the retail bank. The investment banking arm had an exceptionally strong year, with profits up 35%. Given the diversified nature of the bank, this helps to show resilience even during the pandemic.

Given the expected bounce-back in the UK economy later this year, the retail bank should improve performance for 2021. When I add into the mix the resumption of a small dividend and share buybacks, I think now could be a good time to buy in.

Jonathan Smith has no position in Barclays.

Matthew Dumigan: Keywords Studios

The gaming industry has been one of the few to benefit in spite of widespread lockdown restrictions. Furthermore, with the global gaming market looking set to continue expanding over the coming years, companies such as Keywords Studios (LSE: KWS) are ideally positioned to profit. 

According to analysts, the recent release of the next generation games consoles is set to boost demand over the coming years. As such, with Keywords Studios providing essential services to developers in the industry, I think they look set to continue their momentum moving forward.

Matthew Dumigan does not own shares in Keywords Studios.

Conor Coyle: Diageo

FTSE 100 drinks producer Diageo (LSE:DGE) has seen its share price suffer as a result of Covid-19. While ongoing restrictions on the hospitality sector have had a major impact on sales of beer, Diageo’s spirit sales have gone up in key markets due to good off-trade performance.

My feeling is that pubs and restaurants will start to creep open in the months ahead as the vaccine rollout gathers pace, and ultimately return the Guinness owner to its pre-Covid price of around 3200p and beyond, making it my top British stock for March

Conor Coyle owns shares in Diageo.

Zaven Boyrazian: Ocado

Ocado (LSE:OCDO) is often thought of as an online grocery retailer. But last year, the business pivoted.

The company is now using robots to automate the production, packaging and delivery of groceries to 10 other retailers, including Morrisons, Kroger, and Marks & Spencer.

What’s more, there appears to be a network effect. With each new platform customer, more funds become available to reinvest and improve the system, attracting even more customers.

The sudden shift in the business model means it could be a while before it returns to profitability.

However, Ocado looks like a brand new, up-and-coming business that I’d buy and hold in my portfolio despite these risks.

Zaven Boyrazian does not own shares in any company mentioned.

Royston Wild: Reach 

Newspaper publisher Reach (LSE: RCH) is set to update the market at the top of the month (full-year numbers are slated for Monday, March 1). I  think this makes now a great time to buy shares in the company. 

Reach certainly impressed the market with its freshest financials released in early January. Its share price sprang to seven-year peaks after it announced that digital sales continued to accelerate sharply at the end of 2020. I expect next month’s update to confirm that online revenues have kept on marching skywards. 

Reach’s share price has kept growing in recent weeks. Yet the publisher still trades on a forward price-to-earnings ratio of 8 times. This makes it a very attractive UK value share in my book. 

Royston Wild does not own shares in Reach.

Edward Sheldon: Hargreaves Lansdown

My top British stock for March is Hargreaves Lansdown (LSE: HL). It operates the largest retail investment platform in the UK.

Hargreaves Lansdown is benefiting from the increased interest in investing and trading. Its most recent half-year results for the six months to 31 December 2020, for example, showed that it added 84,000 new customers over the period. This was almost 70% higher than the number of customers it added in H1 2019. Revenue for the period was up 16% to £299.5m while diluted earnings per share were up 10% to 32p.

HL isn’t the cheapest stock around. At the time of writing, the forward-looking price-to-earnings ratio is about 26. This means there’s valuation risk. Overall, however, I think the risk/reward proposition is attractive.  

Edward Sheldon owns shares in Hargreaves Lansdown.

Andy Ross: HSBC 

Shares in the Asia-focused bank HSBC (LSE: HSBA) have some momentum, despite concerns about its relationship with the Chinese government and profit falls.   

I believe that the reintroduction of dividends, improved strategy, further cost cutting and Chinese economic growth, can all help revitalise the company and the share price. There’s a lot that can be improved at the bank and therefore a lot of chances for management to be proactive and put in places positive measures to boost the share price. I think the shares are cheap and so offer an attractive level of reward versus risk.  

Andy Ross does not own shares in HSBC.

Roland Head: Persimmon

Demand for new housing stayed strong last year, according to FTSE 100 housebuilder Persimmon (LSE: PSN). The group’s average selling price rose by 6% and Persimmon ended the year with and increased order book.

One possible risk is that the lucrative Help to Buy scheme is due to be restricted to first-time buyers from April. Another concern I have is that the outlook for the UK economy remains uncertain.

However, Persimmon has more than £1bn of surplus cash and strong profit margins. The shares have a historic dividend yield of 4%, but analysts expect a big increase in 2021. I’d consider buying the stock at current levels.

Roland Head does not own any share mentioned.

Tom Rodgers: Barclays

Rising inflation and a steepening yield curve should favour bank profit margins going into March 2021, making my top British stock for this month FTSE 100 turnaround company Barclays (LSE:BARC).

In recently released FY2020 results the bank beat profit forecasts, reinstated its dividend and instigated a £700m share buyback, putting some meat on the bones of a more positive outlook. The shares are trading on an undemanding forward price-to-earnings ratio of 9, and with value investing metrics like price to book and price to free cashflow below 1, Barclays now looks like very tempting buy to me.    

Tom Rodgers has no current position in Barclays.

Manika Premsingh: Just Eat Takeaway

Just Eat Takeway (LSE: JET), the FTSE 100 food delivery provider, will release its 2020 results in March. In my mind there’s little doubt that it would’ve seen robust sales growth during the year, going by the trends so far.

But what I’m really interested in is its outlook for 2021. JET got a lockdown boost as consumers ordered in more than before. Its share price, too, remained strong. The question now is – can it maintain high growth post-lockdown?

I think it would be reasonable to expect some moderation in sales growth this year. But I don’t think it takes away from its robust long-term prospects. In fact, a share price dip on the results may be a good opportunity to buy it then.

Manika Premsingh owns shares of Just Eat Takeaway.

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The Motley Fool UK has recommended Avon Rubber, Barclays, Diageo, Hargreaves Lansdown, HSBC Holdings, Just Eat N.V., Keywords Studios, and Morrisons. 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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