If I had £3,000 to invest in UK shares in July I’d seriously consider buying these top FTSE 100 stocks.
A top UK share for July
With interim results around the corner I think RELX (LSE: RLX) is a top stock to buy. The FTSE 100 information supplier is scheduled to release half-year results on Thursday, 29 July.
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In its last update in April RELX advised that its Scientific, Technical & Medical (or STM), Risk and Legal divisions “have started the year well.” These units account for almost all revenues, the company’s Exhibitions arm accounting for just 5% of the remainder. This means that this UK media share shouldn’t be significantly impacted by a delayed recovery here as Covid-19 restrictions remain in place.
Data and analytics are becoming more and more important to companies as the world becomes increasingly digitalised. I think this makes RELX a great long-term buy. It’s worth recalling that the FTSE 100 share has been extremely busy on the M&A front of late (it spent almost £880m on 11 acquisitions in 2020). While this has the potential to supercharge earnings growth, it also carries huge risks if said acquisitions fail to deliver desired earnings projections and throw up unexpected costs.
City analysts think RELX will report annual earnings growth of 9% in 2021 and 14% in 2022. This does leave the company trading on a chunky forward price-to-earnings (P/E) ratio of 23 times. A reading like this leaves the UK share in danger of a sharp share price reversal if trading conditions worsen.
Another FTSE 100 stock on my radar
St James’s Place (LSE: STJ) is another top FTSE 100 stock whose share price I think could surge next month. The wealth management giant is set to unveil first-half financials on Wednesday, 28 July.
The St James’s Place share price has risen 55% over the past year. It reached fresh record peaks in the aftermath of its last trading update in late May, too. Then it said that “the strong new business activity we experienced in March has continued into the second quarter”. As a consequence of improving market confidence and high savings levels, it said gross inflows between January and June were likely to be around 23% higher year-on-year.
I expect St James’s Place to advise that trading has remained since. And this could lead to further share price gains. However, like RELX, the FTSE 100 business commands a handsome valuation (a forward P/E ratio of 25 times). This could cause a price retracement if news here disappoints. What’s more, trading at the wealth manager could deteriorate if fears over the global economic recovery grow as inflationary concerns rise and the Covid-19 crisis rolls on.
That said, at the moment I think the earnings outlook at St James’s Place still looks mightily encouraging. Indeed, City analysts think annual earnings here will rise 22% and 19% in 2021 and 2022 respectively.