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Top shares for February

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Roland Head: Dixons Carphone

The UK’s largest electrical retailer has a big presence on high streets and online. However, Dixons Carphone (LSE: DC) boss Alex Baldock reckons the firm is “underweight” in internet sales. His turnaround plan aims to correct this. Mr Baldock also wants to reinvent the Carphone Warehouse business and boost profits by selling more gear on credit.

Brexit fears have crushed the share price in recent months, but in my view the stock now looks too cheap for a profitable, market-leading business. A dividend cut is expected, but my figures suggest the shares will still offer a tasty 5% yield. I’m a buyer.

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Roland Head owns shares of Dixons Carphone.

Royston Wild: Macfarlane Group

I believe that full-year results due on Thursday, February 21 could help Macfarlane Group’s (LSE: MACF) share price to gain fresh ground.

The business has proved to be extremely resilient to the difficult economic conditions in the UK, and reported back in November that its performance in the latter half of 2018 “has continued to reflect the good progress demonstrated in the first half”.

City analysts are expecting Macfarlane to remain stable and are anticipating that it will follow an expected 33% earnings rise in 2018 with another 10% increase this year. At current prices the business carries a forward P/E ratio of just 11.7 times, and I reckon this low base could help it to spring higher following next month’s update.

Royston Wild does not own shares in Macfarlane Group.

Kevin Godbold: 3i Infrastucture

I’m bullish on the long-term prospects of 3i Infrastructure (LSE: 3IN), which is a closed-ended investment company that focuses on economic infrastructure and greenfield projects mainly in the UK and in the rest of Europe by investing in operating businesses and projects capable of generating “long-term yield and capital growth.”

I think the sector is a potentially decent investment theme for the next decade or so, but if you dig into 3IN today, you’ll find decent value, operational momentum and a tasty yield, which all look set to deliver decent total returns for investors for the shorter-term too, maybe as early as February.

Kevin Godbold owns shares in 3i Infrastructure.

Edward Sheldon: Workspace Group

My top stock for February is Workspace Group (LSE: WKP), a FTSE 250 property company that offers flexible office, co-working, and meeting room solutions for fast-growing, early-stage companies in London.

Despite Brexit uncertainty, the outlook for Workplace remains bright, in my view. The London startup scene is thriving right now – more than 216,000 new businesses were registered in the capital last year – and Workspace is well placed to benefit. The group’s most recent half-year results were strong, with net rental income up 17% year-on-year and adjusted trading profit after interest rising 20%.

The shares have been sold off in recent months on the back of Brexit fears and I think the selloff has provided an attractive entry point. A prospective yield of around 3.8% adds weight to the investment case.

Edward Sheldon has no position in Workspace Group

Rupert Hargreaves: Greggs 

Amidst all the gloom emanating from the UK high street right now, Greggs (LSE: GRG) stands out as a company that’s still in growth mode.

The firm’s Christmas trading update revealed an outstanding performance during the last few weeks of 2018, with like-for-like sales growing 5.2% in the fourth quarter. And it looks as if the firm is set to remain on this growth trajectory as Greggs rolls out new stores across the country and introduces new menu items. 

At 20.9 times forward earnings, the stock does look slightly pricey but think this is a price worth paying to be part of Greggs’ growth story. A dividend yield of 2.5% only adds to the appeal in my opinion. 

Rupert Hargreaves does not own shares in Greggs.

Peter Stephens: Persimmon 

Although investors have become increasingly concerned about the prospects for the housebuilding industry, Persimmon’s (LSE: PSN) recent update suggests that demand for new homes remains strong. High employment levels and continued low interest rates could catalyse the company’s financial prospects, while a P/E ratio of 7.8 indicates that it may offer a wide margin of safety.

Certainly, there may be more stable investments on offer within the FTSE 100. But with the Help to Buy scheme set to run until 2023 and there being a continued shortage of house completions, the stock may offer high reward potential.

Peter Stephens owns shares in Persimmon.

G A Chester: ConvaTec

Medical devices group ConvaTec (LSE: CTEC) was London’s biggest flotation of 2016. It made a promising start, its shares climbing from the 225p IPO price to near 350p. However, after a string of operational issues (resulting in the departure of the chief executive), the shares have slumped dramatically.

I believe the fundamental business remains sound and that ageing populations provide a strong driver for long-term growth. I rate it a turnaround buy today. I reckon results and a strategy update on 14 February (and potentially the announcement of a new permanent chief executive) could be the catalyst for investor sentiment to begin to change.

G A Chester has no position in ConvaTec.

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