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Top shares for March

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Rupert Hargreaves: Mitchells & Butlers

Even after rising more than 10% year-to-date, shares in pub group Mitchells & Butlers (LSE: MAB) still look undervalued to me. The stock is currently trading at a forward P/E of just 8.2 and a price to tangible book value of 0.7.

This valuation seems to imply that the company is struggling to grow, but this is not the case. The group recently reported a 9.8% rise in comparable sales for the three-week holiday season, surpassing City expectations. Sales hit a record of £12m+ on Christmas Day. 

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If Mitchells continues to report this kind of market-beating growth, I think it is only a matter of time before the stock re-rates. There’s a potential upside of nearly 80% on offer if the shares trade up to the sector average P/E of 15. 

Rupert Hargreaves does not own shares of Mitchells & Butlers. 

Paul Summers: GlaxoSmithKline

With the growing possibility of another bout of volatility hitting the markets as the UK gears up to depart the EU on 29 March, I think it’s best to err on the side of caution and focus on relatively stable, defensive businesses with good geographical diversification.

Taking into account its three global businesses (Pharmaceuticals, Vaccines and Consumer Healthcare) and counter-cyclical qualities, FTSE 100 giant GlaxoSmithKline (LSE: GSK) fits the bill nicely for me.

Available for less than 14 times forecast earnings at the time of writing, the stock looks good value for the security it provides. Assuming everything goes to plan, the company will also return another 80p per share again in 2019. This gives a yield of 5.2% at the current price.

Paul Summers has no position in GlaxoSmithKline.

G A Chester: Domino’s Pizza Group

Domino’s Pizza (LSE: DOM) continues to perform strongly in its core UK and Republic of Ireland markets. However, it needs to invest in infrastructure and so on, for future growth in its newer international markets. While this will hold back profits in the near term, I believe it should reap handsome rewards in the longer term.

In the meantime, earnings are forecast to grow at a still-very-healthy 10% a year over the next couple of years. Trading at an historically low sub-14 forward P/E, with a prospective dividend yield of over 4%, I reckon the shares are a terrific buy at their current level.

G A Chester has no position in Domino’s Pizza.

Royston Wild: Applegreen

Applegreen  (LSE: APGN) is a business whose share price I feel could detonate in the days ahead.

The petrol forecourt retailer is scheduled to release full-year financials on March 19, and if its last trading statement is anything to go by then you should expect some fireworks. Back in September it advised of “robust” trading between January and June when adjusted EBITDA increased by 17% despite the impact of adverse weather in March, and I’m expecting another bubbly release in the days ahead thanks to the strong economic backcloth in Ireland and the positive impact of recent steps to improve its sites.

What’s more, a low, low forward PEG ratio of 0.4 leaves plenty of scope for its stock value to swell in the wake of that forthcoming update.

Royston Wild does not own shares in Applegreen.

Kevin Godbold: HICL Infrastructure

The FTSE 250’s HICL Infrastructure Company (LSE: HICL) is an infrastructure investment company with around 110 investments in infrastructure projects across the United Kingdom, Australia, Canada, France, Ireland and the Netherlands, such as schools, hospitals, roads, rail and facilities for the fire and police services.

I think the infrastructure sector, in general, is presenting rich pickings right now, and HICL has decent operational momentum that reflects in the recent movements of the share price. City analysts expect advances in earnings ahead, and the dividend yield is near 5%. I think HICL looks set to perform well through March and beyond.

Kevin Godbold owns shares in HICL Infrastructure Company.

Roland Head: Marks & Spencer Group

Marks & Spencer Group (LSE: MKS) is one of my top picks for investors hunting for value among Britain’s battered retailers. Despite its well-publicised problems, this FTSE 100 firm continues to generate a lot of surplus cash.

That’s good news for the business, because it means that chief executive Steve Rowe should be able to deliver his turnaround plan without running out of cash. And it’s good news for shareholders, because City forecasts suggest that the company’s 6.5% dividend yield will be maintained.

I believe this could be a good time to buy, ahead of May’s full-year results.

Roland Head owns no share mentioned.

Peter Stephens: Reckitt Benckiser Group

The prospects for companies with exposure to emerging markets, such as Reckitt Benckiser (LSE: RB), could improve over the long run. Rising wages may lead to increasing demand for its products, which could act as a catalyst on its financial performance.

The company’s recent update showed that its restructuring is delivering on its growth aims. It is creating a more efficient business that is better able to leverage its high degree of customer loyalty in key growth markets. Following the acquisition of Mead Johnson, the company appears to be in a stronger position to deliver rising profitability in the coming years.

Peter Stephens owns shares in Reckitt Benckiser.

Manika Premsingh: Spirax-Sarco Engineering

When Spirax-Sarco Engineering (LSE: SPX) announced its half-year results last August, its price rose by a sharp 6%. If this is anything to go by, I’ll be watching its share price movement on March 7 when 2018 numbers are released, making it my top share for the month.

Even though this FTSE 250 company expects to “make progress in 2018”, the fine print’s unconvincing. If results disappoint and the price dips, it’s an opportunity to invest in this financially strong company, which has an uncomfortably high earnings ratio right now. If the opposite happens, it confirms that Spirax should be bought at price dips. Either way, it should be on investors’ radar.

Manika Premsingh has no position in Spirax-Sarco Engineering.

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The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.

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