We asked our freelance writers to share the top British stocks they’d buy in the month of February. Here’s what they chose:
Kevin Godbold: Computacenter
FTSE 250 company Computacenter (LSE: CCC) provides information technology infrastructure services. Over the past decade, the business delivered impressive and steady growth. The trading and financial record shows incremental advances in revenue, earnings, operating cash flow and shareholder dividends. And there’s a net-cash position on the firm’s strong balance sheet.
Recent robust trading was ahead of the directors’ expectations, despite the pandemic. Meanwhile, CCC has a fair valuation. The forward-looking earnings multiple runs near 20 and the dividend yield just below 2%. But I reckon it’s earned that rating. And the stock has decent potential to advance through February and in the coming years.
Kevin Godbold does not hold shares in Computacenter.
Dan Peeke: Lloyds Banking Group
My top British stock for February is Lloyds Banking Group (LSE:LLOY). The bank’s share price hit an eight-year low (24p) in September 2020, and has already risen by around 50% to 36p. This could signal growth to pre-pandemic levels over the course of 2021.
Its potential for cash returns is also interesting. The 2020 ban on dividend payments has been lifted, and analysts have forecast a yield of 5.5% for Lloyds in 2021. My colleague Rupert Hargreaves has even suggested figures as high as 7-8.2%!
Even worst-case estimates could provide me with solid income in 2021.
Dan Peeke has no position in Lloyds Banking Group.
Rupert Hargreaves: Savills
Real estate group Savills (LSE: SVS) recently announced that its trading performance for 2020 would be “at the upper end” of expectations. A buoyant real estate market has helped the group avoid the worst of the pandemic.
And while the company has warned that trading may slow in 2021, I’m optimistic about Savills’ prospects. Low-interest rates and easy credit should continue to support property prices.
That may translate into earnings growth. While this isn’t guaranteed, the company has a good track record of profitability.
Rupert Hargreaves does not own shares in Savills.
Royston Wild: Dechra Pharmaceuticals
The Dechra Pharmaceuticals (LSE: DPH) share price has gone from strength to strength following the 2020 stock market crash. And it recently struck new record highs. I reckon this animalcare specialist could soar to fresh peaks when half-year financials are released on Monday, February 22.
In January Dechra declared that revenues had rocketed 21% in the six months to December. I’m expecting the business to announce that trading has remained strong since then, too. The animal health market is growing at an eye-popping pace. And this UK share has the scale and a top-quality product pipeline to make the most of this huge opportunity.
All this makes Dechra worthy of its elevated forward price-to-earnings (P/E) ratio of 38 times, in my opinion. I think it’s a top British stock for February for me to consider.
Royston Wild does not own shares in Dechra Pharmaceuticals.
Roland Head: Petrofac
As we head into 2021, I’m interested in investing in the oil and gas sector. When the coronavirus pandemic eases, I think demand for transport fuel and other petroleum products will recover quickly.
One company I am considering as a recovery play in this sector is oil and gas services company Petrofac (LSE: PFC). The outlook for the firm is still shadowed by a Serious Fraud Office investigation which started in 2017. But no current employee has yet been charged and the group now has a new CEO.
Petrofac shares currently trade on seven times 2021 forecast earnings. I’d consider buying them for my portfolio at this level.
Roland Head does not own any share mentioned.
Matthew Dumigan: CMC Markets
The CMC Markets (LSE: CMC) share price went on a tear in 2020, rising by 166% on the back of a strong business performance. Yet despite this, the shares trade on a modest forward P/E ratio of 14, which suggests to me there’s still significant value to be had.
In a third-quarter update released at the end of December 2020, the company reported that net operating income for the full year 2021 will be at the upper end of market expectations. Thanks to this positive outlook for the year ahead, I rate CMC as a top British stock for February and beyond.
Matthew Dumigan does not own shares in CMC Markets.
Paul Summers: Hotel Chocolat
Having dropped over 20% in value since mid-December, I’m wondering if now could be a good time to buy omni-channel retailer Hotel Chocolat (LSE: HOTC).
Last month’s trading update was far from grim, in my view. Total group revenue was 19% higher in the 13-weeks to 27 December compared to 2019. In the UK, growth in online orders also “more than offset” the closure of physical stores.
High pandemic-related costs may be concerning some investors but the distribution of vaccines could see these begin to normalise later in the year. Taking into account its growth potential in the US and Japan, I’m tempted to tuck in.
Paul Summers has no position in Hotel Chocolat.
Zaven Boyrazian: Kainos Group
With the vaccine rollout underway, the pandemic will hopefully come to an end soon. But there are many companies and industries that remain significantly affected by Covid-19.
As such, the need to eliminate inefficiencies to save money continues to be a high priority for most businesses. That’s why I like Kainos Group (LSE: KNOS).
The software-as-a-service (SaaS) firm uses cloud-based technology to allow its clients to increase their cost-effectiveness by identifying and eliminating inefficiencies within businesses.
With a long list of clients – including the NHS – I believe Kainos continues to be an essential solution for modern businesses, and that’s why it’s a British stock I’m considering for February.
Zaven Boyrazian does not own shares in Kainos Group.
G A Chester: Centamin
Mid-cap gold miner Centamin (LSE: CEY) suffered a production setback last year. It suspended operations in one part of its mine after detecting movement in a localised area of waste material. However, it recently told us fourth-quarter and full-year 2020 results were within the revised production guidance range issued in October. Indeed, towards the top end of it.
Despite this, the stock remains depressed, leaving the shares dealing at less than 12 times forecast 2021 earnings. There’s also a prospective dividend yield of 5.5%. With a strong, cash-rich balance sheet to boot, I’m expecting a revival of investor interest as the year progresses.
G A Chester has no position in Centamin.
Jabran Khan: Tritax Big Box
Tritax Big Box (LSE:BBOX) invests in and funds pre-let development of logistics facilities and real estate. Logistics is a thriving market due to the boom in online shopping and the Covid-19 pandemic. I believe BBOX will benefit from this continued shift in shopping habits.
In October, BBOX reported excellent Q3 results with high expectations for Q4 and full-year results. Its share price is up nearly 30% compared to January 2020 levels and I see it rising further alongside further positive trading results. I believe the trading update due at the end of January will vindicate my choice.
Jabran Khan has no position in Tritax Big Box
Manika Premsingh: AstraZeneca
The one stand-out FTSE 100 stock of 2020 would unquestionably be the Covid-19 vaccine developer AstraZeneca (LSE: AZN).
Yet, its share price trend has been indifferent since the stock market rally began in early November. This is ironic considering how instrumental its own efforts at vaccine development were in bringing back investor confidence. Acquisition of the US based Alexion Pharmaceuticals also weakened its share price.
But I think this softening share price trend could end in February when it releases its quarter four and year-end results. Its previous result was robust and it continues to make strides in its cancer drugs’ development too. Investor interest in AZN is due to make a comeback, in my view.
Manika Premsingh owns shares in AstraZeneca.
Edward Sheldon: Sage Group
My top British stock for February is Sage Group (LSE: SGE). It’s a leading provider of cloud-based accounting solutions to small and medium-sized businesses.
Sage shares have underperformed over the last six months and I think this share price weakness has created an attractive buying opportunity. A recent trading update confirmed that the company continues to make progress – for the three-month period to 31 December recurring revenue was up 4.7% year on year.
Sage shares aren’t particularly cheap. At the time of writing, the forward-looking P/E ratio is about 26. However, I think this valuation is reasonable given the company’s solid long-term track record and future growth prospects.
Edward Sheldon owns shares in Sage Group
Andy Ross: AstraZeneca
There has been a flurry of product approvals for pharma giant AstraZeneca (LSE: AZN) so far this year – and 2021 has only just begun.
The most recent positive update was from a phase three trial of Calquence, a treatment for chronic lymphocytic leukaemia. The fact trials are progressing during a ravaging global pandemic shows the essential nature of pharmaceutical research work. This should keep the finances in good shape.
The rollout of the Covid vaccine, approved along with Oxford University, has given AstraZeneca a lot of profile. I think this, along with its fantastic R&D and significant drug pipeline, means it could continue to do well.
Andy Ross owns shares in AstraZeneca.
Christopher Ruane: Babcock
I already owned Babcock (LSE: BAB) and after the company’s recent news spooked the market, I increased my position. However, there are two sides to this. On one side, it looks like a newish management team has decided to consider how the company accounts for profits and assets. That looks like a smart move, which the market has unnecessarily punished by beating the shares down.
The competing view is that the review could lead to a new accounting approach which makes the company seem less profitable than previously thought. If that is right, the shares could stay lower.
So, I expect a bounce back in February from what I see as a market overreaction. But I recognise that Babcock’s prospects continue to divide the City.
Christopher Ruane owns shares in Babcock.
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The Motley Fool UK has recommended Hotel Chocolat, Kainos, Lloyds Banking Group, Sage Group, and Tritax Big Box REIT. 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.