We asked our writers to share their top stock picks for the month of January, and this is what they had to say:
G A Chester: Centamin
FTSE 250 gold miner Centamin (LSE: CEY) reported record production at its Sukari mine in Egypt in Q3. And strong production from its existing operations is complemented by continuing exploration not only in Egypt, but also in Burkina Faso and Cote d’Ivoire.
A P/E of 17.5, falling to 15 for 2018 on the back of 16% forecast earnings growth, looks good value to my eye. And there’s also a 3.3% dividend yield, rising to 4% next year. Just for good measure, it has bags of cash and no debt. As such, it’s a stock I’d be happy to buy today.
G A Chester has no position in Centamin.
Paul Summers: Computacenter
Shares in IT infrastructure services provider Computacenter (LSE: CCC) performed admirably in 2017. I think this momentum is likely to continue ahead of full-year results on 22nd January, especially as November’s trading update suggested these will now be “comfortably in excess of previous expectations”.
As a further incentive, Hatfield-based Computacenter — whose clients include Domino’s Pizza and John Lewis — recently restated its intention to return £100m to investors through a tender offer. Although details are still to be finalised, those invested can reasonably expect the share buyback to happen at a premium to the current price.
Paul Summers has no position in Computacenter.
Bilaal Mohamed: Costain
My top stock for January is international engineering and construction group Costain (LSE: COST). The Maidenhead-based firm deploys technology-based solutions to meet urgent national needs across the UK’s energy, water, and transportation infrastructures.
The group’s strong market position, reputation for innovation, and wide range of integrated services has enabled it to secure a raft of new contract awards and extensions to existing contracts over the past year, leaving the firm with a very healthy order book.
Rapid growth in recent years has led to a doubling of the share price since 2013, but I think there’s plenty of value left in the shares at their present rating of 13 times 2018 earnings.
Bilaal has no position in Costain Group.
Rupert Hargreaves: Man Group
Shares in Man Group (LSE: EMG) surged by nearly 100% during 2017, and I expect this trend to continue into 2018.
After several years of turbulence, it looks as if the asset manager has finally got back on track with earnings per share set to jump 55% this year, and 22% for 2018. Based on these estimates, shares in the publicly listed hedge fund trade at a forward (2018) P/E of 13.7, which isn’t too expensive considering the growth on offer here.
As earnings grow, City analysts expect the company to increase its dividend payout per share next year. A total distribution of 8.8p per share is expected, up 14% year-on-year giving a yield of 4.4%. If you’re looking for a cheap growth play, with an income upside in 2018, Man could be the firm for you.
Rupert Hargreaves does not own shares in Man Group.
Roland Head: Mitchells & Butlers
I think pub group Mitchells & Butlers (LSE: MAB) could perform strongly in January. The firm has recently reported tough trading conditions, but managed to maintain like-for-like sales growth of 1.8% during the year to 30 September.
Adjusted earnings only fell by 1.4% last year and cash flow remained healthy. Investors have also supported the board’s prudent decision to suspend the interim dividend this year.
Encouragingly, like-for-like sales rose by a more energetic 2.3% during the first seven weeks of the firm’s current financial year. I believe a strong post-Christmas trading update in January could push the stock closer to 300p.
Roland Head does not own shares of Mitchells & Butlers.
Alan Oscroft: On The Beach Group
If this cold winter has got you thinking of roasting on a beach somewhere instead of staring miserably out at the sleet and snow, you certainly won’t be alone. And that brings home what I like about On The Beach Group (LSE: OTB). The company has a single and simple focus — it does short-haul beach holidays.
There’s been plenty of growth already, with the shares having doubled since flotation in 2015. And we’re looking at a P/E valuation of around 20. But On The Beach has only just started on its overseas expansion into Scandinavia and beyond, and I think we’re at the start of a longer growth phase.
Alan Oscroft has no position in On The Beach Group.
Royston Wild: PageGroup
I reckon PageGroup (LSE: PAGE) could be the share to get your investment portfolio off to a bang in 2018.
Investors headed for the exits in October after third-quarter trading numbers underlined the troubles PageGroup is facing in the UK. But I reckon the brilliant revenues opportunities in its foreign markets, and particularly in the US and China, makes it a great dip pick today (sales in these regions rose 29% and 21% respectively in Q3).
PageGroup is expected to generate a 9% earnings improvement in 2018, resulting in an undemanding forward P/E ratio of 15.9 times. A jumbo 4.3% dividend yield adds extra appeal.
Royston Wild does not own shares in PageGroup.
Kevin Godbold: Tate & Lyle
I’m seeing an attractive blend of quality, value and momentum in food and beverage sweetener and ingredients provider Tate & Lyle (LSE: TATE). In the November half-year report, the company said it expects underlying adjusted profit before tax in constant currency for the full year to be “modestly higher than we anticipated… driven by the strong first half performance.”
At 705p, the stock sits some 13% higher than it did at the end of September, momentum that looks set to continue into the new year. Meanwhile, a well-covered forward dividend in excess of 4% will keep shareholders warm while waiting.
Kevin does not hold shares in Tate & Lyle.
Peter Stephens: Tesco
Companies that are focused on the UK are not currently en vogue. Risks associated with Brexit are keeping investor sentiment pegged back. However, this could create a long-term buying opportunity in stocks such as Tesco (LSE: TSCO). The supermarket may face a competitive industry where shoppers are under pressure because of higher inflation, but it is forecast to grow its earnings by 56% this year and by a further 24% next year.
Such strong growth rates mean that Tesco has a PEG ratio of just 0.6. With dividends set to rise by over 60% next year, it could also become an enticing income play.
Peter Stephens owns shares in Tesco
Edward Sheldon: WPP
My top stock for January is advertising giant WPP (LSE: WPP).
WPP endured a terrible 2017, with its share price falling over 30% between March and November. Sentiment towards advertising stocks was low in general, and a cautious outlook from the company in March and a cyber attack in June didn’t help.
However, at the current share price, I believe the shares offer value. With analysts forecasting earnings of 121p for FY2017, the stock trades on a P/E of just 11.3. Furthermore, an attractive dividend yield of 4.4% is on offer.
In the short term, the World Cup and the Olympics this year should help boost sentiment. In the long run, exposure to the emerging markets and digital advertising should propel revenues and earnings higher.
Edward Sheldon owns shares in WPP.
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The Motley Fool UK has recommended Domino's Pizza. 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.