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Top stocks and shares to buy in August

Private investor buying UK shares at home
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Like many private investors, I like to cast my net wide to find the best stocks and shares to buy. Depending on what the market does in August, it’s possible I’ll buy shares from the FTSE 100 all the way down to newly listed companies and small caps.

With that in mind then, these are some of the shares I might buy for my portfolio.

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One of my top shares to buy in August

I’ve previously been bullish on a number of FTSE 100 shares. Croda (LSE: CRDA) is one I’m confident about. Just this week, the chemicals company said it expected annual profit to be well ahead of expectations. This kind of confidence is often good for the share price and indeed the shares were up on the day of the announcement, even as the market fell.

The results also showed that pretax profit rose 41% to £204.1m in the six months to the end of June from a year earlier as sales surged 39% to £934m. 

I think the end markets that Croda serves mean it should continue to do well in future. That in turn should help Croda keep growing. Its customers are typically in life sciences and personal care – both of which I think are growth industries. They do serve a wider customer base, but these are the most exciting ones.

The biggest potential downside I’m keeping an eye out for is the valuation. The quality of Croda hasn’t gone unnoticed by investors. It means the shares trade on a price-to-earnings ratio of 47.

However, the quality means I think it may be one of the best stocks I can buy in August – especially if the shares dip. I’ll add it to my portfolio if there’s strong summer selling. I’d be tempted back in at around the 7,500p mark. 

The small-cap option

I’ll end with one of the smaller companies I like the look of. Recent results sent SourceBio International (LSE: SIO) shares flying. That partially redeemed a share price that has been falling through much of the year to date.

The results showed that in the first half, revenue rose nearly fourfold to £37.3m.

The company said the return of elective surgery led to a recovery in its cellular pathology business. This is a return to normal that I think is likely to continue 

Much of the legacy business is returning to normal, while the new infectious disease testing business is expected to benefit from increasing travel in the second half.

Despite this, the shares are very cheap on a forward P/E of only around four.

The main risk in my view is around the limited outlook for infectious diseases. How long will we need testing after everyone is vaccinated? Then what will SourceBio do with all that capacity it has invested in and what will that mean for its efficiency?

Overall, although the future is uncertain, the shares are so cheap, SourceBio is one I’ll think about adding to my own portfolio in August.

Just to end, I am also thinking about National World, a business that recently listed and that I covered here for The Motley Fool.

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Andy Ross owns no share mentioned. The Motley Fool UK has recommended Croda International. 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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