(Part 1/2 of “Top shares for July”)
Edward Sheldon: Boohoo Group
My top stock for July is online fashion retailer Boohoo Group (LSE: BOO). The shares have drifted lower recently and I think now is a good time to be building a stake in the business.
Boohoo released an excellent trading update in mid-June, which showed that it continues to grow at a rapid pace, with revenue for the three months to the end of May surging 39%. That’s certainly an impressive result in the current environment.
Additionally, a number of brokers have increased their price targets for the stock recently, including Jefferies who increased its price target to 300p, and HSBC who raised its price target to 290p. These price targets imply that the stock has substantial upside right now.
Edward Sheldon owns shares in Boohoo Group.
Rupert Hargreaves: Dunelm Group
There’s only a handful of retailers that are outperforming in the current retail climate, and Dunelm Group (LSE: DNLM) is one of them. While the majority of its peers are struggling, Dunelm’s sales are still growing at a rapid clip.
In the third week of June, the company raised its full-year profit forecast for the second time this year, informing investors that it now expects full-year 2019 pre-tax profit to be in the range of £124m to £126m, up around a quarter from 2018. According to management, a surge in online orders during May and June helped the company surpass internal expectations.
Dunelm’s impressive growth at a time when the rest of the retail industry is remarkable in my eyes and, on that basis, I think it could be worth considering this stock for your portfolio today.
Rupert Hargreaves owns no share mentioned.
Karl Loomes: BT
Having seen its share price suffering the past few years due to rising costs and falling revenues, BT Group (LSE: BT-A) has maintained its strong dividend in the hope of holding onto investors. Normally a red flag, this time I think it’s an opportunity.
In the first year of a three-year turnaround plan, management has already announced plans to cut 13,000 jobs, a major cost reduction move. This is in large part thanks to the end of arcane commitments the firm had as a hangover from its public company days that effectively made it impossible to make staff redundant. The share price is around 195p, and I consider that a bargain!
Karl owns shares in BT.
Royston Wild: PayPoint
PayPoint’s (LSE: PAY) share price has retreated from recent two-and-a-half-year highs as macroeconomic and geopolitical fears have weighed on broader market sentiment.
The investment community, then, needs a reminder of the payment and retail services provider’s exceptional profits outlook, and I reckon first-quarter trading details scheduled for July 24 will provide just that.
The FTSE 250 firm certainly impressed in May when it advised that there were 12,881 of its cutting-edge PayPoint One terminals up and running as of March, some 400 ahead of target. And I’m expecting installations to remain strong following the adoption of Salesforce’s customer relationship management (CRM) technology.
PayPoint’s forward P/E ratio of 16.2 times might not make it conventionally cheap, but a bulging 8.1% corresponding dividend yield really takes the edge off. All told, I reckon it’s a great share to snap up right now.
Royston Wild does not own shares in PayPoint.
Fiona Leake: ITV
ITV (LSE: ITV) is a stock that conjures up mixed reactions; however, the delicious yield of 7.6% and low price makes it far too tempting for me to ignore. ITV has performed well in Q1 of this year, despite concerns raised by Brexit. The company’s share of national TV views increased by 24% whilst ITV Hub users have also risen by 29%.
Investors also have the launch of ITV Hub tailored ads to look forward to, which is set to boost revenue after a rather modest 1% revenue growth so far this year. The return of Love Island has also seen the channel benefiting from an increased viewership. With potential growth prospects ahead, a low stock price and great dividends, I see this as a very persuasive investment for July.
Fiona Leake does not own shares in ITV.
Roland Head: SSP Group
Shares in travel catering specialist SSP Group (LSE: SSPG) have risen by more than 200% since the group’s flotation in 2014.
However, the shares have been fairly flat since the end of 2017, even though SSP’s pre-tax profit rose by 24% to £184.4m last year. This means the stock’s price-to-earnings ratio has fallen significantly over the last 18 months.
Slowing growth in Europe and the UK is a risk. But earnings are expected to rise by 13% this year. Boss Kate Swann remains excited about “high growth markets” such as North America and Asia.
I think there’s more to come from SSP and rate the shares as a buy.
Roland Head does not own shares in SSP Group.
The Motley Fool UK owns shares of PayPoint and SSP Group. The Motley Fool UK has recommended boohoo group 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.