The Motley Fool

Top British stocks for June 2020

We asked our freelance writers to share the top British stocks they’d buy in the month of June. Here’s what they chose:


Royston Wild: Centamin

Share indices might be off March’s multi-year troughs but the going is tough. Key economic gauges continue to shock, suggesting that while the bottom has already been plumbed we should expect a long (and possibly bumpy) recovery in global GDP.

It could well pay to remain invested in safe-haven stocks like Centamin (LSE: CEY), then. Investors in the gold mining giant would have greeted the yellow metal’s rise to new seven-year peaks above $1,750 per ounce in May. The hair-raising rhetoric that has emerged between the US and China in recent weeks has helped the hard currency to keep rising and should continue driving prices, too.

At current prices Centamin deals on a forward P/E ratio of 14 times. It carries a bulky 4% corresponding dividend yield, too. I reckon it’s a top British stock pick for June.

Royston Wild does not own shares in Centamin.


Rupert Hargreaves: Unilever

The global economy is reeling from the coronavirus crisis, and right now, it’s difficult to tell which companies will survive. With that in mind, I think Unilever (LSE: ULVR) is an excellent investment for the current market. 

The company is one of the world’s largest consumer goods producers. It owns a range of multi-billion-pound brands, which have a substantial consumer following. 

Demand for these products may dip over the next few weeks, but should grow over the long term. A dividend yield of 3% also adds to the stock’s appeal.

The recent market sell-off could be an excellent opportunity to buy this global consumer goods champion at a discount price.

Rupert Hargreaves owns shares in Unilever.


Matthew Dumigan: Royal Dutch Shell

The Royal Dutch Shell (LSE: RDSB) share price has taken beating in the stock market crash thanks to a collapse in oil prices and the outbreak of Covid-19.

However, the industry titan looks well-placed to withstand the pressure of plunging profits over a prolonged period. Moreover, once the world economy recovers, demand for oil should swiftly return to pre-pandemic levels. 

Looking ahead, substantial investment into renewables and clean energy could deliver attractive returns to investors. 

Of course, holding for the long term is necessary. But with such a cheap valuation, I find it difficult not to classify shares in Shell as undervalued.

Matthew Dumigan owns shares in Royal Dutch Shell.


Kevin Godbold: Bunzl

FTSE 100 specialist international distribution and services company Bunzl (LSE: BNZL) posted some decent first-quarter figures at the beginning of April. Revenue rose, and underlying trading had been robust in the areas of safety, grocery, healthcare, cleaning and hygiene. However, Covid-19 has been negatively affecting the roughly 35% of revenue from the foodservice and retail sectors.

Meanwhile, governments have “increasingly” designated Bunzl as a critical supplier, enabling the firm to play an “important” role in the coronavirus crisis. I reckon the company is well placed to thrive in a world featuring the virus, and this top British stock could continue its recovery during June as lockdowns ease.

Kevin Godbold does not hold shares in Bunzl.


Anna Sokolidou: Polymetal

Polymetal International (LSE:POLY), the second-largest gold producer in Russia, has been steadily growing its sales revenue and profits for several years.

The Covid-19 crisis will continue to have a negative effect on many countries’ economic indicators. This will force many central banks to keep the interest rates next to zero. This, in turn, will put upward pressure on gold prices.

84% of Polymetal’s revenues come from selling the yellow metal. So, the correlation between gold and Polymetal’s shares is really strong.

However, gold itself does not pay any dividends or interest, whereas POLY yields about 4% in dividends.

Anna Sokolidou has no position in Polymetal.


Kirsteen Mackay: Auto Trader

I think the Auto Trader (LSE:AUTO) share price will increase in June as UK lockdown restrictions are eased. As car showrooms reopen, they will get back to paying to advertise on Auto Trader and as people get back to work, they will return to buying and selling vehicles. Auto Trader’s revenues are linked to the number of cars being advertised on its website.

Its price-to-earnings ratio is 25 and earnings per share are 21p. It has been hurt by the lockdown and offered free listings to keep big advertisers on board and to give customers at home plenty to browse. I think the second-hand car dealing market will increase as the country slides into recession.

Kirsteen does not own shares in Auto Trader.


Edward Sheldon: Computacenter

My top British stock for June is Computacenter (LSE: CCC). It’s a leading provider of technology solutions to businesses and public sector organisations.

I expect Computacenter to benefit from Covid-19 disruption. While digital transformation has been on the agenda for many businesses for years now, the disruption we have experienced recently is likely to push them to embrace it wholeheartedly. Already, the FTSE 250 company appears to be benefiting. On 15 May, the group said that the first half of 2020 will be “considerably ahead” of the same period of last year.

CCC shares currently trade at a very reasonable valuation. I believe now is a good time to be buying.

Edward Sheldon has no position in any shares mentioned.


Jonathan Smith: IG Group

Despite the broader FTSE 250 index being down for the year, IG Group (LSE: IGG) has seen a share price rally of 12.4% over the same period. The retail stockbroker and spread-betting firm makes higher revenue during volatile times due to increased client activity.

In a April trading update, the firm announced 22,500 new accounts had been opened in Q2 already, compared to 36,000 in the previous three quarters.

If existing clients are trading more and a large number of new clients are coming onboard, then it is only a matter of time before we see a spike in revenue and profits.

Jonathan Smith does not own shares of IG Group.


Tezcan Gecgil: Marston’s

My top choice for June is pub operator Marston’s (LSE: MARS). It is currently the UK’s largest brewing business, with six breweries and eleven distribution centres. It also has 1,400 pubs, restaurants, cocktail bars and inns.

In late May the share price skyrocketed. Management announced that the group will merge the brewing business with Carlsberg UK to form Carlsberg Marston’s Brewing Company. Investors were delighted.

Needless to say, the hospitality trade, including pubs, has suffered greatly since the lockdown that began in March. And that decline in business has been reflected in the share price. Despite last week’s run up in price, year-to-date, MARS shares are down close to 50%.

The industry is hopeful as of July most pubs will be able to welcome guests again. And such grand opening can only help support the stock.

I’d buy the dips.

Tezcan Gecgil does not own shares in Marston’s.


Tom Rodgers: Dart Group

With air bridges likely opening between the UK, Portugal, Greece and Spain, all eyes are now turning towards a recovery in UK travel shares.

The AIM-listed airline operator Dart Group (LSE: DTG) owns Jet2 and its main routes are to Europe and the Mediterranean. Dart is bound to get a boost pent-up travel demand.

It has a P/E ratio of just 7 and is highly profitable: bosses said full-year 2020 profits would be 49% ahead of 2019.

There’s also plenty of room to rebound: its share price gained 119% in 2019 but now sits at 63% cheaper than pre-Covid.

Tom Rodgers currently has no position in Dart Group.


Roland Head: Royal Mail

It’s been a difficult year for Royal Mail (LSE: RMG), but I think the postal operator’s shares now trade at a level that offers serious value for patient investors.

The recent departure of chief executive Rico Back suggests a more dramatic shake-up of the group’s operations is now likely. Changes are needed to accelerate the shift from letters to parcels, but I believe that with new leadership the business should rise to this challenge.

In the meantime, I think shareholders can take comfort from the group’s £3.1bn property portfolio — nearly twice its £1.8bn market cap. I reckon June is the time to buy this top British stock.

Roland Head does not own shares in Royal Mail.


Andy Ross: Reckitt Benckiser

Shares in Reckitt Benckiser (LSE: RB), owner of cleaning products like Dettol and health products such as Nurofen, have momentum. The shares, over just the last month, are up over 10%. I expect this momentum is being driven by investor demand for companies that will benefit from Covid-19 – which, as an FCMG company focusing on health and hygiene, Reckitt Benckiser surely will.

That coupled with the potential for dividend growth, at a time when higher-yielding shares are cutting investor payouts, makes the shares attractive.

There’s a risk the rapid increase in the share price means there could be a correction. Though often, momentum can be maintained and that’s what I expect to happen in June.

Andy Ross owns shares in Reckitt Benckiser.


G A Chester: Capital Gearing Trust

Capital Gearing Trust (LSE: CGT) remains my top buy for balancing near-term risk and long-term reward. Results last week for the year ended 5 April showed a 0.1% increase in NAV per share versus a 24.8% fall in the MSCI UK Index. In the spring market crash, the NAV suffered a maximum decline of 9.9% between 20 February and 19 March, while the UK equity market plunged 32.8%.

The trust’s defensive positioning, with a mix of equities and lower-risk assets, means it should perform relatively well in the event of further market stress. Meanwhile, its 8%-a-year return since 2000 is a not-to-be-sniffed at long-term performance.

G A Chester has no position in Capital Gearing Trust.


Peter Stephens: Reckitt Benckiser

Reckitt Benckiser’s (LSE: RB) recent trading update highlighted the progress it is making against key long-term objectives.

For example, it is investing in new technology to access e-commerce growth, while seeking to position its portfolio to capitalise on long-term growth trends such as an ageing world population.

The company’s stock price has moved higher this year, which means that it trades at a premium to many of its index peers. However, its recent sales growth and diversity could make it an attractive long-term buy during an uncertain period for the world economy.

Peter Stephens owns shares in Reckitt Benckiser.


Manika Premsingh: Burberry Group

FTSE 100 luxury fashion brand and retailer Burberry (LSE: BRBY) has been hit hard by Covid-19 and the stock market crash. Its recently released financials show a fall in revenue. But it continues to remain profitable.

With China on the mend, it could have somewhat better times in store during the second half of the year. Even though luxury spending can take a hit as the global recession sets in, it’s well-established brands like BRBY that should be able to weather it. Its share price has already risen 35% since March 23, when the FTSE 100 touched its bottom. I think it’s a top British stock for June.

Manika owns shares of Burberry Group


Paul Summers: Codemasters Group

The recovery in markets has been remarkable but I remain cautious, particularly as we’re getting closer to when companies will be required to provide actual numbers on just how bad trading has been. To mitigate this risk, my pick is video game developer and lockdown beneficiary Codemasters Group (LSE: CDM)

While there’s no guarantee that it won’t fall along with everything else in the event of a second market crash, the mid-cap is already trading at a discount to industry peers. For 17 times forecast earnings, new buyers will get a company with no debt, lots of cash and an eagerly anticipated new game coming in August (Fast & Furious Crossroads). All this before even considering the great growth prospects for gaming in general.

Paul Summers has no position in Codemasters Group.


 

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The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Auto Trader, Burberry, and Marstons. 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.