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Best stocks for October 2019

Rupert Hargreaves: Wizz Air

Wizz Air (LSE: WIZZ) has only been around for 10 years, but it is already a force to be reckoned with in the European airline market. Since 2014, revenue has risen nearly 200% and net profit is up 234%.

City analysts are expecting a similar performance over the next two years. They’ve pencilled in earnings growth of 16% for fiscal 2020 and 21% for 2021.

Based on these targets, Wizz is trading at a forward P/E of 12.1 and PEG ratio of 0.5, which looks cheap compared to the firm’s projected growth rate. That’s why I think it could be worth adding this fast-growing airline to your portfolio today.

Rupert Hargreaves owns no share mentioned.


Karl Loomes: Bunzl

A FTSE 100 stock you may never have heard of, the London-based distribution firm Bunzl (LSE: BNZL) looks like it may have good prospects to me. The company in effect supplies other firms with all those small but essential things they need, from loo roll to hard hats, meaning that even when economies start to slow, its products are still essential.

Of even greater benefit at the moment is the weak pound brought about by Brexit concerns. Bunzl gets about 60% of its revenues from the US, but has to repatriate those dollars into sterling. While Brexit troubles keep the pound under pressure, now is the perfect time to buy this defensive stock.

Karl owns shares of Bunzl


Royston Wild: Unilever

Unilever’s (LSE: ULVR) not had the best of things in September, its share price slumping from record peaks above £53.20 printed at the start of the month and curtailing its stratospheric rise in 2019.

This recent weakness is likely nothing more than a blip in the household good’s manufacturer’s ascent, however — it’s gained 85% in value over the past five years — and I reckon that third-quarter financials scheduled for mid-October could prompt fresh waves of buying.

Last time out it advised that underlying sales continued to grow despite challenging markets (up 3.3% in the first half), with volumes actually picking up in the latter part of the period. I’m expecting signs of more resilience in that upcoming release.

Royston Wild owns shares in Unilever.


Thomas Carr: Cineworld

Cineworld (LSE: CINE) shares have disappointed so far this year, but I fancy that trend to reverse. Whilst admissions were down in the first half of the year, the film slate in the second half is much stronger, including the likes of The Lion King, Avengers and Star Wars.

As the cinema operator progresses with the refurbishment and integration of its newly acquired American business, there is the prospect for meaningful synergies and operational improvements. Considering the renewed focus on shareholder returns and a generous dividend, I think these shares are too cheap and reckon they will push on from here.

Thomas Carr owns shares in Cineworld.


Tom Rodgers: Aviva

Insurance giant Aviva (LSE: AV) has a hugely tempting 7.7% dividend yield and the share price is recovering nicely from an early September dip. Dividend growth over the last five years is also up an average 15%. That makes Aviva a sensible buy with the prospect of great returns.

Looking longer term, credit ratings agencies give Aviva a clean bill of health when it comes to meeting policyholder obligations.

New CEO Maurice Tulloch says slashing debt is top of his to-do list, so I’m confident the share price will gain strongly, too.

Tom Rodgers does not own shares of Aviva.


Kevin Godbold: Reckitt Benckiser

New chief executive Laxman Narasimhan started on 1 September at FTSE 100 fast-moving goods stalwart Reckitt Benckiser (LSE: RB), and I reckon refreshed leadership can be positive for businesses.

With July’s half-time report, the company said it’s been working to make its two divisions structurally independent. To me, separating the Health and Hygiene Home divisions looks like a move designed to add value. It could even lead to one unit spinning off from the other as a separate company.

I reckon there’s a chance of the shares rising in anticipation of enhanced value ahead, perhaps as early as during October.

Kevin Godbold does not own shares in Reckitt Benckiser.


Edward Sheldon: Sage Group

My top stock for October is accounting solutions provider Sage Group (LSE: SGE). Its share price has pulled back significantly over the last two months, and right now I think the stock offers value.

What I like about Sage is that it’s a high-quality company. Recurring revenue is high, return on equity is excellent, and debt is low. The company also has a great dividend growth track record.  

Sage has been a 200-bagger since it listed on the London Stock Exchange in 1989; however, portfolio manager Nick Train recently said in an interview that he’s “hoping that the growth story is only just getting started.” With that in mind, I think the stock is worth a closer look.

Edward Sheldon owns shares in Sage.


Fiona Leake: Redrow

Redrow (LSE: RDW) is currently a steal in my opinion, with a P/E ratio of just 6.8 and a dividend yield of over 5%. I believe that now is the time to buy, with shares up 18% in just the last month alone and revenue jumping 10% in the past financial year.

Despite the growing economic and political uncertainty, the UK still has a huge shortage of homes. New-build sales continue to be through the roof and show no signs of slowing down any time soon. I think that Redrow will continue to grow in October and, at such a criminally cheap price, I wouldn’t say no to investing.

Fiona Leake does not own shares in Redrow.


Paul Summers: Biffa

With most of the largest one-day falls since 1984 occurring in the month, October has a poor reputation among investors. This year’s added ingredient of Brexit coming to a head could make it another volatile one. 

Right now, I’m favouring companies with defensive qualities. That’s why my pick is waste management and recycling firm Biffa (LSE: BIFF). Regardless of what happens politically over the next few weeks, the mid-cap will continue to provide the essential service of collecting our bins.

It won’t shoot the lights out in terms of growth, but a valuation of 11 times earnings takes account of this. At almost 3.2% at the time of writing, the dividend is both decent and safely covered by profits.

Paul Summers has no position in Biffa.


Kirsteen Mackay: BAE Systems

The share price of FTSE 100 defence giant BAE Systems (LSE:BA) has risen over 20% in the past six months.

Its trailing price-to-earnings ratio is 14, which is reasonable for its sector and earnings per share are 41p. It has a trailing dividend yield of 3.35% and the next dividend will be announced in October.

At the end of September, it was awarded a £2.2bn US defence contract to support the US military and its foreign military sales. It also agreed to acquire Prismatic, a UK solar drone maker.

In this volatile political climate, I think this is a solid company with further prospects ahead. 

Kirsteen Mackay owns no share mentioned.


Andy Ross: Hastings Group 

With a trading update due towards the end of the month, the insurer Hastings Group Holdings (LSE: HSTG) could be a top riser in October. I think the key driver for the share price will be the effect the change to the Ogden rate is having. Hastings has already said it is setting aside an extra £8.4m in its calculations to meet the cost.

I expect with the shares now providing a high yield (over 6%) and a low P/E of around nine, any good news could see the share price bounce back. In the last results, live customer policies increased 4% to 2.81m, so there is momentum from that perspective.

Andy Ross does not hold shares in Hastings Group Holdings.


Stepan Lavrouk: JD Sports

Shares of JD Sports (LSE: JD) have been on a great run over the course of the last month, returning almost 18% to shareholders. However, there are reasons to be optimistic that this excellent performance may continue going forward.

For one thing, I like that JD has been able to expand its retail footprint, even as the high street as a whole has been losing ground. For another, I believe that its expanding international presence gives it a good advantage relative to rival retailers who are more focused on the domestic market in today’s Brexit climate. 

Stepan Lavrouk does not own shares of JD Sports.


Roland Head: IG Group

Very few stocks benefit directly from volatile market conditions. One company that does is FTSE 250 financial trading specialist IG Group Holdings (LSE: IGG). Customers of the online CFD and spread betting provider tend to trade more heavily when markets are rising or falling than when market are flat.

IG shares are unloved following regulatory changes last year. But a recent trading update suggests to me that this highly profitable business will continue to grow.

The shares are trading on 16 times earnings and offer a 6.8% dividend yield. I think that’s too cheap and rate IG as a buy.

Roland Head owns shares of IG Group Holdings.


Peter Stephens: Sainsbury’s

Sainsbury’s (LSE: SBRY) recent trading update highlighted an improvement in its performance relative to the wider market. Its refreshed growth strategy will focus on cost reduction and improving the customer experience. This could begin the process of delivering a successful turnaround for the retailer following a prolonged decline in its share price.

Although its net profit growth may be limited in the near term, Sainsbury’s overall strategy and price-to-earnings (P/E) ratio of 10 suggest that it could be undervalued at the present time. With a dividend yield of 5%, it could offer long-term turnaround potential.

Peter Stephens does not own shares in Sainsbury’s.


Manika Premsingh: BAE Systems

Since a share price crash at the end of May this year, aerospace and defence solutions provider BAE Systems (LSE: BA) has risen a sharp 30%. That it has just won a $2.7bn US defence contract is likely to keep the price buoyed, given that the deal size amounts to over 13% of last year’s revenue.

It’s a financially healthy company in a defensive sector, which can be relied upon at a time when the outlook for global macros is relatively uncertain. I don’t see any structural risks from a long-term perspective either. To me it looks like the price will rise higher, and it’s better to buy it before it does.

Manika Premsingh has no position in BAE Systems.


G A Chester: Barclays

Barclays (LSE: BARC) continues to be the most unloved of the big FTSE 100 banks. Last month’s news that it’ll book an additional provision of £1.2bn-£1.6bn for PPI in Q3 (results due 25 October) won’t have done anything to win over sceptics.

However, I expect its capital position to still be strong, and with it trading at a deep discount to book value, on a low P/E and high dividend yield, I see it as a compelling contrarian ‘buy’. I think the reward for holding through Brexit volatility could be a very nice upward rerating of the shares further on.

G A Chester has no position in Barclays.


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The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Barclays, Redrow, Sage Group, and Wizz Air Holdings. 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.