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Top shares for July

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

Edward Sheldon: JD Sports Fashion 

My top stock for July is JD Sports Fashion (LSE: JD), as I think there’s a lot to like about the company from an investment perspective, despite the grim outlook for the UK high street. 

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JD is essentially a play on two of the most powerful brands in the world — Nike and Adidas. As a result, it’s well placed to benefit from the World Cup. Furthermore, it’s also a play on millennial consumers, who tend to spend money on trainers and athleisure wear, irrespective of economic conditions. 

It’s also worth noting that the group is expanding internationally across Europe and the US, and therefore, has plenty of growth potential. Weighing up these factors, I see considerable long-term investment appeal. Barclays recently slapped a 510p price target on the stock. 

Edward Sheldon owns shares in JD Sports Fashion.

Royston Wild: PageGroup

I reckon splashing the cash on PageGroup (LSE: PAGE) could be a sage strategy ahead of the company’s second-quarter trading update scheduled for Wednesday, July 11.

Whilst I expect the business to again caution of tough trading conditions in its UK market, PageGroup should in all likelihood produce another set of stunning results for its overseas units. Gross profits leapt by double-digit percentages across all of its major foreign territories in quarter one, it reported last time out.

City brokers are expecting profits at the FTSE 250 business to rise 16% in 2018, and for the company to pay a 27.2p per share dividend, resulting in a monster 4.7% yield. A low forward PEG reading of 1.2 times puts the cherry on top.

Royston Wild does not own shares in PageGroup.

Rupert Hargreaves: Gulf Keystone Petroleum

Since its restructuring in July 2016, shares in Gulf Keystone Petroleum (LSE: GKP) have languished at around 100p but recently, as the price of oil has surged back to $80 a barrel, the stock has woken up. 

The company’s future now looks brighter than it has done for a long time. Management is planning to invest more than $200m to increase production by 72% over the next 18 months, and City analysts expect the debt-free company to report earnings per share of $0.29 for 2018, rising to $0.36 by 2019, which puts it on an estimated 2019 P/E of 8.7. 

As Gulf Keystone continues its comeback story, I believe the shares should continue to head higher. 

Rupert does not own shares in Gulf Keystone Petroleum

Paul Summers: Merlin Entertainments

Considering the excellent weather we’ve experienced over recent weeks and the fact that not everyone will be bothered by the World Cup, my top pick is theme park owner Merlin Entertainments (LSE: MERL).  

Shares in the £4bn-cap company are showing signs of recovery following last October’s profit warning. April’s reassuring update revealed that trading had been in line with expectations, and management were confident that visits to its London attractions — down year on year following the 2017 terrorist attacks — would get back to normal in time.

At a little under 19 times forecast earnings, stock in Merlin isn’t exactly cheap but I’m optimistic its value will keep rising in anticipation of the latest set of interim numbers in August.

Paul Summers has no position in Merlin Entertainments

Peter Stephens: British American Tobacco 

Shares in British American Tobacco (LSE: BATS) have fallen by 29% in the last year, with the tobacco industry continuing to be unpopular among investors. Regulatory risks and falling cigarette volumes have contributed to investor unease, with price rises seen as an unsustainable response to declining smoking rates.

However, the stock could deliver a solid recovery. The investment it is making in next-generation products could provide it with significant growth over the medium term. With its bottom line due to rise by 9% next year and the stock having a P/E ratio of 12, it could offer a wide margin of safety.

Peter Stephens owns shares in British American Tobacco

G A Chester: Hochschild Mining

Hochschild (LSE: HOC) is a long-established silver miner, with three mines in Peru and one in Argentina. In April, it reported a strong start to the year, two of its mines performing better than expected and two inline. I’m anticipating further good news in a Q2 production report scheduled for 18 July.

The City consensus earnings forecast for the current year puts Hochschild on a P/E of 31. This is pretty high, but I rate it a ‘buy’ today on the basis that the market will start to look towards 2019 for which strong earnings growth forecasts halve the P/E.

G A Chester has no position in Hochschild.

Kevin Godbold: Reckitt Benckiser

In April with its first-quarter update, fast-moving consumer goods giant Reckitt Benckiser Group (LSE: RB) reported a “Solid start overall in Q1.” Restructuring after last year’s acquisition of Mead Johnson Nutrition Company means that the director’s focus across the two new divisions could lead to improved growth prospects. The share price is responding well and recent declines seem to be reversing.

I see the firm as a decent vehicle for long-term investing and think it is a good candidate to ride the recovery in ‘defensive’ stocks that looks set to happen, in my opinion. July could be a good month for the stock!

Kevin Godbold does not own shares in Reckitt Benckiser Group.

Roland Head: Persimmon

FTSE 100 housebuilder Persimmon (LSE: PSN) currently offers a forecast dividend yield of 8.7% for 2018, rising to 9.2% for 2019. Such high yields would normally suggest that a cut is likely, but in this case I think the stock’s June sell-off may have gone too far.

Although recent updates from rivals make it clear that builders’ profit margins are under pressure from rising costs, Persimmon’s dividend guidance was backed by net cash of £1.3bn at the end of 2017.

This cash should cover about 90% of forecast dividends for 2018 and 2019. I believe the shares could rebound strongly if August’s half-year results are in line with expectations.

Roland Head has no position in Persimmon.

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The Motley Fool UK has recommended Merlin Entertainments. 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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