We asked our freelance writers to share the best British stocks they’d buy this October. Here’s what they chose:
G A Chester: Gamma Communications
Gamma Communications (LSE: GAMA) is in the high-growth market of unified communications as a service (UCaaS) for businesses. Whether employees are in the office, at home, in a coffee shop etc, the company’s products enable them to communicate in multiple ways with colleagues and customers. Need I say more than ‘hybrid working’?
Gamma is a UK leader but has also recently entered Europe where cloud-based UCaaS is at an earlier stage. There’s risk in this expansion abroad, but huge potential. Gamma’s shares may have overheated through the summer and I see a recent pullback as an opportunity for me to buy.
G A Chester has no position in Gamma Communications.
Charlie Keough: F&C Investment Trust
My best stock for October is F&C Investment Trust (LSE: FCIT). The FTSE 250 stock, with over £5bn in assets, has performed solidly year-to-date.
The trust offers access to an array of sectors in numerous locations, all with cheap ongoing charges. I specifically like its relatively large weighting in emerging markets. Its long-term investment strategy is also an appealing factor.
Launched in 1868, this trust has stood the test of time. Its 70% return (at the time of writing) over the past five years show that FCIT is a solid long-term investment to buy in October.
Charlie Keough does not own shares of F&C Investment Trust.
Rupert Hargreaves: Wickes Group
Wickes Group (LSE: WIX) is one of the primary beneficiaries of the home improvement trend that has evolved over the past 12 months. Over the 26 weeks to the 26th June, sales jumped 22.4% compared to 2019 levels.
Management seems to think this trend will continue, and it is reinvesting windfall profits back into the enterprise to improve the customer experience and digital proposition.
As customer demand remains elevated, I would buy the shares for my portfolio.
However, challenges such as rising wages and materials shortages may prove to be a thorn in the company’s side as we advance.
Rupert Hargreaves does not own shares in Wickes.
Edward Sheldon: Gamma Communications
My best stock for October is Gamma Communications (LSE: GAMA), which specialises in remote work solutions. Its share price has fallen recently and I think this has created a nice entry point for long-term investors like myself.
Gamma’s recent first-half results were good. Revenue was up 23% year on year while adjusted earnings per share were up 30%. The dividend was increased 13%. Looking ahead, Gamma said it was “optimistic” about future growth.
Gamma does have a higher valuation. So, this adds some risk. Overall, however, I think the long-term risk/reward proposition here is very attractive.
Edward Sheldon owns shares in Gamma Communications
Roland Head: Synthomer
My pick for October is chemicals group Synthomer (LSE: SYNT). This FTSE 250 business produces a range of products, including medical latex gloves.
Demand has surged due to Covid-19 and Synthomer’s pre-tax profit rose by 40% to £160m last year. The company has reported further gains during the first half of 2021.
The risk is that when demand returns to normal, profits will collapse. But with the stock trading on just 10 times 2022 forward earnings, I think a cautious outlook is already priced in. I believe Synthomer could do well over the next few years.
Roland Head owns shares of Synthomer.
Zaven Boyrazian: Alpha FX
In today’s global economy, being able to manage foreign currency exchange risks has become paramount. That’s where Alpha FX (LSE:AFX) steps in.
The firm provides exchange risk-management services using a commission-based cost structure. This makes it far more accessible for smaller and medium-sized businesses compared to traditional corporate banking solutions. But beyond currencies, Alpha FX has launched a payment processing network for rapid international large-scale transactions.
In the last six months, revenue from its currency services grew by 48%. But its payments solution saw sales surge by 600%!
The company faces some fierce competition from corporate banks and rival financial service firms. However, Alpha FX continues to expand its market share nonetheless.
Zaven Boyrazian owns shares in Alpha FX.
Christopher Ruane: Stagecoach
You wait ages for buses, then three come at once. Might this also describe bus company takeover bids?
News that rival National Express may bid for Stagecoach (LSE: SGC) could flush out other potential suitors for the Perth-based bus giant. Like we saw at Morrisons, it could be “all aboard” for a bidding war. In that case, I see short-term upside for Stagecoach shares – which is why I’ve made it my best stock to buy in October.
Even without a bid, I like Stagecoach for its large network, well-established brand and industry experience. One risk is takeover talks distracting management and slowing revenue recovery.
Christopher Ruane owns shares in Stagecoach.
Charles Archer: Centamin
I think gold stocks like Centamin (LSE: CEY) are a good hedge against rising inflation. And while gold is down 13% over the past year, it’s still near record levels.
The company is mining 400,000 ounces of gold in 2021. It has no debt, $312m in liquid assets, and pays a reliable 5% dividend. However, its share price is volatile. But at 92p today, analyst consensus is upbeat for the gold miner.
There is a risk that the gold spot price will continue to fall. But I think Centamin is a safe long-term investment in this inflationary environment.
Charles Archer does not own shares in Centamin.
Andy Ross: Vertu Motors
Shares in car dealer Vertu Motors (LSE: VTU) have fallen from recent five year highs. This seems primarily due to the wider market weakening through much of September and potentially also some profit taking because the shares accelerated.
The slight share price fall could be an opportunity though October and beyond. The shares are undoubtedly cheap on a P/E of six. That’s plus point number one.
Number two is that car dealers are posting exceptional results at the moment across the board. This is due to the semiconductor shortage pushing up the prices of used cars. These conditions could well persist and boost Vertu’s profits.
Andy Ross owns shares in Vertu Motors.
Royston Wild: Prudential
Okay, the Prudential (LSE: PRU) share price has bounced following the heavy falls it experienced towards the end of September. But the FTSE 100 stock still trades at a 7% discount to levels printed at the start of the month. This provides a chance for UK share investors to engage in some shrewd dip buying.
Prudential’s share price slumped as fears over the Chinese economy blew up. The life insurance giant has famously made Asia the nucleus of its growth strategy. So naturally concerns over the region’s largest economy shook investor confidence in the company.
As a long-term investor I wasn’t readying to sell my own Prudential holdings, however. I remain bullish over the FTSE 100 firm’s huge Asian bias, a plan that should allow it to exploit soaring wealth levels in those far-flung regions in the years ahead. I continue to think it’s one of the best stocks to own in October despite the threat posed by a Chinese slowdown in the more immediate future.
Royston Wild owns shares in Prudential.
Paul Summers: Avon Protection
Supply chain issues, a tight labour market and product approval delays have collectively tanked the share price of respirator maker Avon Protection (LSE: AVON). While a full recovery will take time, I think the margin of safety is now sufficiently attractive for me to begin building a position.
With customers including the US Department of Defense, Avon is the global leader at what it does and, 2021 aside, has shown itself to be a quality business over the years. Given recent consolidation in the sector, I wouldn’t rule it out as a potential bid target.
Paul Summers has no position in Avon Protection
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The Motley Fool UK has recommended Alpha FX, Avon Protection, Gamma Communications, Prudential, Synthomer, and Vertu Motors. 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.