We asked our freelance writers to share the top British stocks they’d buy this July. Here’s what they chose:
Zaven Boyrazian: Oxford Biomedica
Oxford Biomedica (LSE:OXB) is a biotech company that established a proprietary drug development platform called LentiVector. Using this technology, larger pharmaceutical companies like Bristol Myers Squibb and Novartis can pursue new treatments that would otherwise be considered too expensive or technically challenging.
More recently, it has been put in charge of producing AstraZeneca’s Covid-19 vaccine. Earlier this month, the contract was expanded, roughly doubling the expected income in the process.
The contract alone could be worth £100m, potentially doubling the firm’s revenue stream. However, with a large bulk of income originating from a single source, there’s always the risk of revenue being compromised in the future. But Personally, I think the potential returns are worth the risk.
Zaven Boyrazian owns shares in Oxford Biomedica. His mother is an employee involved with clinical trials for Bristol Myers Squibb.
Rupert Hargreaves: TI Fluid Systems
TI Fluid Systems (LSE: TIFS) manufactures fluid storage, carrying, delivery and thermal management systems for light vehicles. The pandemic has impacted its sales, but the business is now well on the way to recovery.
Revenues increased 14.2% in constant currency during the first quarter of 2021. Based on this growth, management is expecting free cash flow to return to pre-covid levels this year.
Of course, this is not guaranteed. Another economic slowdown or decline in vehicle production could hurt demand for the company’s products. Still, I would buy the stock as a way to invest in the global economic recovery in the months ahead.
Rupert Hargreaves does not own shares in TI Fluid Systems.
Edward Sheldon: Smith & Nephew
My top stock for July is Smith & Nephew (LSE: SN). It’s a medical technology company that specialises in joint replacement systems.
I’m bullish on Smith & Nephew for two main reasons. The first is that the stock is a ‘reopening’ play. This year, profits should get a boost as elective medical procedures are resumed.
The second reason I like SN is that the company is well placed to benefit from the world’s ageing population. An increase in the number of over-60s globally in the years ahead should boost demand for its products.
Smith & Nephew’s valuation is higher than that of the average FTSE 100 stock. This is a risk to consider. Overall, however, the stock’s risk/reward profile is attractive, in my view.
Edward Sheldon owns shares in Smith & Nephew
Paul Summers: Motorpoint Group
Car retailer Motorpoint (LSE: MOTR) could prove a lucrative medium-term hold. Trading has accelerated in recent months as branches have reopened and UK drivers have been spending their lockdown savings. A global shortage of semi-conductors for new vehicles should support this demand for nearly new cars for a while.
The shares already hit a record high in June, perhaps in preparation for good news. Still, a forecast P/E of 22 (at the time of writing) isn’t too steep in my opinion. Motorpoint generates consistently superb returns on the money invested in the business – something I always look for.
Paul Summers has no position in Motorpoint Group
Kirsteen Mackay: Tesco
I think FTSE 100 stock Tesco (LSE:TSCO) is one to watch in July. With Morrisons rejecting a takeover bid, I think it shines a spotlight on supermarket stocks. Tesco offers a 4% dividend yield, a forward price-to-earnings ratio of 12.6 and its share price is at the low end of analyst expectations.
Tesco’s Q1 earnings show signs of growth. Group retail sales came in at £13.3m, this was up 8.1% on a 2-year-period and 1-year up 1%. Tesco does have a high level of debt. But I think it has staying power thanks to its extensive consumer data generated by its Clubcard.
Kirsteen Mackay has no position in Tesco.
Christopher Ruane: S4 Capital
I remain bullish about S4 Capital (LSE: SFOR), the digital advertising agency network.
Early in June, the company chairman hinted that it would reveal news of a couple of acquisitions later in July. The company is highly acquisitive and such announcements tend to attract investor attention. On top of its increased growth forecasts for the year, I think that could provide a July boost to the S4 Capital share price.
Acquisitions cost, though, and there is a risk of share dilutions to help fund the purchases.
Christopher Ruane owns shares in S4 Capital.
Royston Wild: MJ Gleeson
The British housing market remains in rude health despite the Covid-19 crisis. And this has led to sharp price increases for UK housebuilding shares. Take MJ Gleeson (LSE: GLE) for instance. This small cap has risen an impressive 29% in value during the past 12 months.
Yet at current prices I think MJ Gleeson’s share price remains mightily cheap. It commands a forward price-to-earnings growth (PEG) ratio of 0.8, below the bargain-basement benchmark of 1. I think the release of fresh financials on 9 July remind the market of its terrific profits outlook and prompt fresh buying interest from value seekers. Last time it updated the market in May MJ Gleeson predicted that earnings for the full year would be ahead of market expectations thanks to “strong demand for new homes.”
Royston Wild does not own shares in MJ Gleeson.
Roland Head: Airtel Africa
I’ve chosen African mobile operator and payments group Airtel Africa (LSE: AAF) as my top stock for July. This FTSE 250 firm recently reported 25% profit growth for the year to 31 March, but still offers a 5% dividend yield.
I’m excited by the long-term growth potential of the company’s African markets, which I think should outperform the mature telecoms markets of western Europe and the US.
Although I think that investing in Africa carries some extra political and operational risks, I reckon Airtel Africa shares are cheap enough to reflect this. I’ve recently bought the stock for my portfolio.
Roland Head owns shares of Airtel Africa
Kevin Godbold: Britvic
Branded soft drinks company Britvic (LSE: BVIC) delivered a positive outlook statement in May. The firm saw “encouraging” sales in the second half to 31 March because of the easing of lockdowns. And the directors are increasing re-investment into the business to “capitalise on near-term market opportunities and drive long-term growth.”
Britvic scores well against quality indicators. And trading is improving. Although a positive investment outcome isn’t certain, I’m tempted to buy the stock for July and beyond despite the full-looking valuation. Near 943p, the forward-looking earnings multiple is just above 16 for the trading year to September 2022.
Kevin Godbold does not own shares in Britvic.
Nadia Yaqub: BT
I’ve recently turned bullish on BT (LSE: BT-A). A few weeks ago, the company announced that billionaire, Patrick Drahi through his firm, Altice took a 12% stake. This investor has a wealth of experience and I reckon it could be a turning point for BT.
But the UK firm isn’t without its problems. It has a significant amount of debt and a sizeable pension deficit. For me, the main thing is that it has a plan. BT has stated that it remains on track for a zero funding deficit by 2030. I reckon things look promising for the company.
Nadia Yaqub does not own shares in BT
G A Chester: Fresnillo
A share-price decline of 27% makes silver and gold miner Fresnillo (LSE: FRES) the FTSE 100’s worst performer so far this year. It’s also in the red on a one-year view. Volatile precious metals prices and operational risk come with the territory, but I think the stock currently offers me a margin of safety and great value.
Analysts are forecasting earnings growth of 80% for 2021 and a 40% dividend increase. A P/E of 14 is low by the company’s historical standards, a PEG of 0.2 is in the bargain basement, and a historically high dividend yield of 3.2% adds to the appeal for me.
G A Chester has no position in Fresnillo.
Tom Rodgers: Rolls-Royce
News that FTSE 100-listed engine manufacturer and defence contractor Rolls-Royce (LSE:RR) is selling off its Spanish subsidiary ITP Aero for around €1.5bn gives me confidence that this British brand can climb in July. That would give it the ability to pay down its admittedly huge debt pile and brighten its future prospects. The value on offer at these prices has also attracted broker Berenberg to forecast a near 50% target increase from here, and that’s the kind of re-rate that shows institutional confidence is returning for Rolls-Royce after an horrific couple of years.
Tom Rodgers does not currently own shares in Rolls-Royce
Jonathan Smith: Aviva
Aviva (LSE:AV) is a well-known insurance provider. I like the fact that it’s transforming focus of business and putting more focus into the core UK operations. This was seen recently with the agreement to sell off Aviva France for €3.2bn.
This also helps to boost the cash position of the business, which should support future dividend payments. The current dividend yield of 5.06% looks attractive for income investors.
The Q1 update also highlighted the highest Q1 sales in the general insurance division for a decade. With this backdrop, Aviva is my top stock for July.
Jonathan Smith does not own shares in Aviva.
Andy Ross: ITV
Shares in broadcaster ITV (LSE: ITV) could do well in July in the run up to its 2021 interim results, due out on the 28th July.
Back in May, the broadcaster sounded relatively upbeat. ITV Studios revenue was recovering, a key driver of growth, as was advertising revenue.
Content such as Saturday Night Takeaway and Six Nations rugby modestly boosted viewing numbers. I’m hoping the European Football Championships continues that trend.
Further optimism from ITV executives when the results come out could I think really help the share price. However, of course there’s a risk the update could miss expectations or have a negative outlook, which would likely send the share price down.
Andy Ross does not own shares in ITV.
Harshil Patel: Synthomer
My top stock for July is chemicals company Synthomer (LSE:SYNT). It supplies polymers to several markets including carpets, and coatings.
The company is experiencing strong trading momentum across all of its business areas. It recently highlighted a positive outlook and I think strong trading is likely to continue this year.
Although uncertainty remains in the global economy, I believe Synthomer offers a reasonable margin of safety.
Overall, I’d say the stock is pretty cheap. It trades at a price-to-earnings ratio of 10 and offers decent earnings growth. It has plenty of cash and even offers a dividend of over 3%.
Harshil Patel does not own shares in Synthomer.
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The Motley Fool UK has recommended Britvic, Fresnillo, ITV, Morrisons, Motorpoint, Smith & Nephew, Synthomer, and Tesco. 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.