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Top shares for May 2019

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Kevin Godbold: Bunzl

FTSE 100 distribution and outsourcing company Bunzl (LSE: BNZL) saw its shares knocked back in April on the release of its first-quarter trading statement. Revenue growth has slowed to as low as 1% in some areas of the business. But I like the set-up supplying companies and organisations with stuff they use themselves such as food packaging, grocery, films, labels, gloves, bandages, safety consumables, chemicals, and products for cleaning and hygiene.

Robust incoming cash flow is a feature of Bunzl’s financial record. I’m keen on the firm’s long-term prospects, and see potential for a bounce-back in the shares during May.

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Kevin Godbold does not hold shares in Bunzl.

G A Chester: Centamin

A production update in late April has increased my confidence that FTSE 250 gold miner Centamin (LSE: CEY) is set for a much-improved performance in 2019. Q1 production was above forecast, and management also said costs are trending toward the lower end of annual guidance.

Centamin’s performance last year was marred by operational challenges. But, having strengthened its operational leadership team with “top-tier technical individuals”, I’ve made the stock my top ‘buy’ on both its near- and long-term prospects.

The company is set to publish three-year outlook guidance in Q2, and I think this could be a catalyst for further improving investor sentiment.

G A Chester has no position in Centamin.

Rupert Hargreaves: Travis Perkins 

Towards the end of last year, shares in Travis Perkins (LSE: TPK) slumped to a five-year low of 975p. Since then the stock has made a remarkable recovery rising around 50%, and I think there could be much more upside on offer for shareholders here. 

At the time of writing the stock is trading at a forward P/E of 12.6, whereas for much of the past five years investors have been prepared to pay a multiple of 15 or more. City analysts are also expecting the firm’s fortunes to improve over the next two years. Analysts are forecasting net profits of £300m in 2020, up from a loss of -£86m in 2018. 

With a dividend yield of 3.3% on offer as well, it looks to me as if shares in Travis Perkins could have much more upside ahead. 

Rupert Hargreaves does not own shares in Travis Perkins.

Edward Sheldon: Reckitt Benckiser

My top stock for May is consumer goods champion Reckitt Benckiser (LSE: RB), which owns an impressive portfolio of health and hygiene brands including Nurofen, Durex and Dettol.

RB shares were trading above £65 in March, yet they have recently pulled back to the £60 level on news that healthcare company Indivior – which Reckitt used to own – had illegally boosted prescriptions for its blockbuster opioid addiction treatment. However, analysts at Barclays believe that it’s unlikely RB will face criminal charges over this issue so I think the market has overreacted here.

With the stock now trading on a forward P/E ratio of 17 and offering a dividend yield of around 3%, I think now is a good time to be buying.

Edward Sheldon owns shares in Reckitt Benckiser

Roland Head: IG Group

FTSE 250 online financial trading firm IG Group (LSE: IGG) has been hit hard by a regulatory crackdown on spread betting and CFD services. But the firm remains highly profitable and is the market leader in this sector. It’s also diversifying into new markets.

IG shares have fallen by more than 40% since August 2018. This has left the stock trading on 12 times 2019 forecast earnings, with a dividend yield of 8.3%.

Management expect this dividend to be maintained until the business returns to growth. A strategy update is due later this month. I rate the shares as a buy.

Roland Head owns shares of IG Group.

Paul Summers: Superdry

Its entire board may have resigned but I’m cautiously optimistic on founder and major shareholder Julian Dunkerton’s chances of turning retailer Superdry (LSE: SDRY) around.

While this month’s pre-close trading statement is unlikely to contain much in the way of good news, I’m heartened by Dunkerton’s commitment to transparency, reduced discounting, the shelving of its kidswear range and returning the company to its design-led roots.

The shares have been heavily sold off since January 2018 and now trade on less than 10 times earnings. That’s an attractive risk/reward play in my book and I’ve now taken a small stake in the firm with the intention of adding if the price dips again.

Paul Summers owns shares in Superdry.

Royston Wild: Smurfit Kappa

I’d be very happy to dump some cash into Smurfit Kappa Group (LSE: SKG) ahead of first-quarter financials scheduled for Friday, May 3.

The FTSE 100 packaging giant’s recovery story, driven by the realisation that the sell-off of last autumn on supply concerns was much too exaggerated, has run out of steam more recently. And I’m backing upcoming trading numbers to remind the market of what a great buy Smurfit Kappa is. 

Back in February it advised that pre-tax profits barring exceptional swelled 56% in 2018 to €938m — and for buyer appetite to pick up again. The company’s low, low rating – a forward P/E ratio of 9.1 times – certainly provides plenty of scope for some new share price gains.

Royston Wild does not own shares in Smurfit Kappa.

Manika Premsingh: AstraZeneca

FTSE 100 listed pharmaceutical major AstraZeneca (LSE: AZN) has shown good results in the first quarter of this year, making it my top share for the month of May. Its financials have disappointed in the recent years, with a steady decline in revenues, but the tide is fast turning for the cancer drugs’ producer. It has seen revenues rise consecutively for the last three quarters and operating profit is up by a super strong 68% in the latest quarter.

Even though its price to earnings ratio is still uncomfortably high at 45x, especially when compared to companies like GlaxoSmithKline at 21x, the broad decline in price over the last month suggests that it will start inching up after the latest earnings update. 

Manika Premsingh has no position in AstraZeneca.

Peter Stephens: Taylor Wimpey 

Even though housebuilder Taylor Wimpey’s (LSE: TW) share price has surged higher in recent months, it still trades on a P/E ratio of just 8. Its dividend is covered 1.2 times by net profit and stands at almost a 10% yield. With a £500m net cash balance, it appears to have a solid financial outlook.

Although house price growth has slowed in the last couple of years, the company recently reported buoyant demand for its homes. Low interest rates and favourable government policies could lead to surprisingly strong trading conditions that may further catalyse the Taylor Wimpey share price.

Peter Stephens owns shares in Taylor Wimpey

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The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca, Barclays, and Superdry. 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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