The Motley Fool

Top shares for June

We asked our writers to share their top stock picks for the month of June, and this is what they had to say:

Roland Head: Dixons Carphone

Dixons Carphone (LSE: DC) shares slumped on 29 May after new boss Alex Baldock cut profit guidance for 2018/19. But I feel the market may have over-reacted to this news.

The group’s performance during the year ended 28 April was pretty solid, with like-for-like revenue up 4% and profits in line with forecasts.

Although earnings will be lower this year, cash generation is expected to remain strong and the dividend will be held at 11.25p per share. I estimate that the shares now trade on a forecast P/E of 9, with a dividend yield of nearly 6%. That seems too cheap to me, for a market-leading business.

Roland Head owns shares of Dixons Carphone.

G A Chester: Centamin

Shares of FTSE 250 gold miner Centamin (LSE: CEY) fell heavily near the end of May after the Egypt-focused operator lowered production guidance for 2018. It also said costs will be higher than previously anticipated.

However, to me this looks very much a temporary setback for the miner’s low-cost, long-life asset. I expect production to head higher again in 2019.

The company, which has $425m cash on its balance sheet and no debt, is trading on a current-year forecast P/E of 14, with a prospective dividend yield of 4.5%. This looks highly attractive to my eye and I rate the stock a top buy for June.

G A Chester has no position in Centamin.

Kevin Godbold: Imperial Brands

Investors sold down the stock of smoking-focused, fast-moving consumer goods company Imperial Brands (LSE: IMB) over the last couple of years along with other firms operating defensive businesses. Valuations had become too rich and I reckon we’ve seen investors rotate out of expensive-looking defensives and into cheaper-looking cyclical companies.

But since the end of March, Imperial Brands’ share price has turned up. I see the firm as a decent long-term hold and today’s lower valuation and fat dividend yield attracts me. I think it could do well during June and beyond.

Kevin Godbold does not own shares in Imperial Brands.

Rupert Hargreaves: Genel Energy 

Between January 2014 and January 2017, shares in Genel Energy (LSE: GENL) lost 93% of their value as the company suffered, with the rest of the oil industry, from the oil price slump. 

However, year-to-date shares in the oil minnow have surged 151% as higher oil prices have lifted investor sentiment. And it looks as if insiders are also expecting a big year for the firm. Emma Gudgeon, the wife of non-executive director Martin Gudgeon, recently forked out £230,000 on the group’s shares. 

The City is expecting the company to post earnings per share of $0.40 this year, giving a forward P/E of 9.6. So it looks to me as if this stock can push higher. 

Rupert does not own shares in Genel Energy. 

Royston Wild: Gooch & Housego

I reckon the release of half-year numbers on Tuesday, June 5th could provide a fresh catalyst for Gooch & Housego’s (LSE: GHH) share price to rise.

In April’s trading update the photonic component and system manufacturer advised that overall market conditions remain “positive” and that “there continue to be exceptional levels of demand for critical components used in microelectronic manufacturing.” The company’s order book jumped to a record £84.7m as of March, and fresh news on the trading landscape in next month’s release could see investors pile in again.

City analysts expect Gooch & Housego to report a 14% earnings rise in the year to September 2018. I reckon a subsequent forward P/E ratio of 24.4 times is a decent valuation given the chances of strong profits growth continuing long into the future.

Royston Wild does not own shares in Gooch & Housego.

Edward Sheldon: ITV

My top stock for June is ITV (LSE: ITV). The FTSE 100 company currently trades on a low forward P/E ratio of just 10.7 and offers a very attractive prospective yield of 5%. I believe these metrics are unjustified.

A recent Q1 update was positive, with total external revenue increasing 5%, and revenue from the content side of the business, ITV Studios, rising 11%. With an exciting schedule for the rest of the year, which includes the World Cup and Love Island, I think the company can generate a solid performance in 2018.

The shares bounced higher after the Q1 update, but I think there could be more gains to come for patient investors.

Edward Sheldon owns shares in ITV.  

Paul Summers: Howden Joinery

Recent momentum in the share price of FTSE 250 kitchen supplier Howden Joinery (LSE: HWDN) could continue in advance of interim results in July.

Last month’s trading update was encouraging with the company revealing a 14.8% rise in UK revenue in the 16 weeks to 21 April. Although comparatives with the previous year will get tougher going forward, plans to add “around 30” new depots and 19 product ranges in 2018 suggest a positive outlook on the part of management.

Even if the shares don’t fly, Howden Joinery remains a quality company that justifies its 16 times forecast earnings valuation. Returns on capital employed are consistently high and there’s a healthy amount of cash on the balance sheet.

Paul Summers has no position in Howden Joinery.

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The Motley Fool UK has recommended Gooch & Housego, Howden Joinery Group, Imperial Brands, and ITV. 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.