My top share tips for September

Rupert Hargreaves outlines his top share tips for September and explains why he would buy all of these companies.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

I’m focusing on buying stocks set to benefit from the economic recovery in September. My personal top share tips centre on companies in the hospitality and commercial property sectors. These two industries have suffered far more than most of the pandemic. As such, they may stand to gain far more in the recovery. 

Share tips for September 

Starting with commercial property, one stock I’d buy in September is NewRiver REIT. This enterprise owns a portfolio of commercial property assets, which used to include a portfolio of pubs. However, earlier this year, the group sold its pub business for a gross consideration of £222m. 

Following this disposal, it has a stronger balance sheet, which should help support its recovery. The remaining portfolio comprises 33 community shopping centres and 19 retail parks. Rent collection from tenants has picked up steadily and totalled 87% of outstanding rents in the first quarter. 

As well as NewRiver, I’d also add to my position in British Land. This company features on my list of share tips for September because it’s one of the country’s largest commercial property owners. As well as owning a portfolio of retail parks, the group owns offices and is expanding into urban logistics. 

By owning both NewRiver and British Land, my portfolio will have broad exposure to many sections of the commercial property market. 

I like this sector as a recovery play, but it might not be suitable for all investors. Commercial property values remain depressed, and there’s no guarantee they will pick up after the pandemic. Further, a sudden increase in interest rates could increase financing costs for these companies, reducing profitability. 

Hospitality sector

In the hospitality sector, my top share tips for September are Mitchells & Butlers and Loungers. I’d buy both of these stocks for my portfolio, considering their recovery potential. 

Café and restaurant operator Loungers’ revenues plunged 53% in the financial year ending 18 April. Despite this challenging performance, the company also noted that between 17 May and 18 July, sales were up 24% against 2019 levels

Management believes the trend for flexible working and the reinvigoration of UK high streets are two highly positive developments for the group. It’s investing in opening new cafés to capitalise on this growth. This is why I’d buy the company for my portfolio as a growth stock. 

I think Mitchells & Butlers has more risk as share tips go, so I’d only buy a speculative position for my portfolio. That said, after hospitality was allowed to reopen on 17 May, trading was at 98% of pre-pandemic levels. Overall, I think Loungers is the better buy, but I still want to have some exposure to a pub operator in my portfolio. 

Key challenges these enterprises may face include wage inflation, staffing issues and rising prices, impacting profit margins. There’s also the threat of another economic lockdown, which could set their recoveries back months. Therefore, these stocks may not be suitable for all investors. 

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 considered so you should consider taking independent financial advice.

Rupert Hargreaves owns shares of British Land Co. The Motley Fool UK has recommended British Land Co. 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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