We asked our writers to share their top stock picks for the month of March, and this is what they had to say:
G A Chester: Associated British Foods
Shares of Primark owner Associated British Foods (LSE: ABF) are 25% off their 52-week high and I believe now could be a good time to buy a slice of the business.
The market has been fretting about Primark’s like-for-like sales and margins but the business remains fundamentally sound. Moreover, there is a great international expansion story here with a long ‘growth runway’.
The conglomerate’s sugar business is also set to start generating significant profits again, as prices become more favourable after a few soft years. As such, I can see ABF rapidly justifying its relatively high current earnings rating.
G A Chester has no position in Associated British Foods.
Rupert Hargreaves: Coats Group
Since Coats (LSE: COA) reached a £256m agreement with its pension scheme administrators at the beginning of December, shares in the company have surged by around 100%. However, even after these gains, the shares still look cheap.
Coats currently trades at a forward P/E of 11.4 and analysts are expecting earnings per share to grow by 13% in 2017, indicating a PEG ratio of 0.9. What’s more, the shares trade at an EV to EBITDA ratio of 5.4, almost half the Textiles & Apparel Industry average of 9. With pension lawsuits now resolved, Coats’ management can concentrate once again on running the business, and with the shares trading at a discount valuation, they look too good to pass up.
Rupert does not own shares in Coats.
Bilaal Mohamed: Dixons Carphone
My top stock for March is Europe’s leading specialist electrical and telecoms retailer Dixons Carphone (LSE: DC). The group which includes Currys, PC World and Carphone Warehouse has certainly suffered as a result of the Brexit-effect, with its shares trading 30% lower than a year ago and struggling to stay above £3 per share.
But in its most recent trading update the company reported a fifth consecutive year of Christmas growth, with revenues up 4% for the 10 weeks to 7 January on a like-for-like basis, and growth in the UK & Ireland even stronger at 6%. Dixons Carphone continues to perform well despite the uncertainty.
The City is anticipating steady mid-single-digit growth in each of the next three years, resulting in a very tempting valuation of just 9.5 times earnings for the current year to April, dropping to 8.6 by fiscal 2019.
Bilaal has no position in Dixons Carphone.
Jack Tang: Hammerson
With the stock market trading near an all-time high, it’s harder to find cheap dividend stocks to invest in. However, one stock which has caught my eye is real estate investment trust Hammerson (LSE: HMSO).
Despite headwinds in the UK retail sector and Brexit-related uncertainty, rents for prime retail space have stayed strong. For FY2016, Hammerson reported an 8.8% increase in net rental income to £346.5m. And on a like-for-like basis, rents were up 2.2%, only slightly lower than last year’s gain of 2.3%.
Hammerson currently trades at a 20% discount to its net asset value of 739p, with the stock offering investors a yield of 4.1%.
Jack does not own shares in Hammerson.
Alan Oscroft: Ibstock
Many investors look for exciting new ideas, for innovation, for technology… but I reckon dull and boring products can generate the most reliable cash over the long term. And that’s what makes me pick Ibstock (LSE: IBST) for March.
Ibstock makes bricks. And concrete products. And lots of cash. That cash ends up in the pockets of shareholders via well-covered dividends, with a yield of 3.5% on the cards for the year just ended, followed by forecasts for 4.1% and 4.4% for 2017 and 2018.
With the shares priced on a forward P/E of 11, and 2016 results expected to look good, I see a long-term bargain here.
Alan Oscroft has no position in Ibstock.
Royston Wild: Moss Bros
I reckon a strong full-year results statement (currently scheduled for Tuesday, March 28) could see Moss Bros’ (LSE: MOSB) share price gain serious traction.
Indeed, Moss Bros advised last month that like-for-like sales jumped 6.1% during the 23 weeks to January 7, underlining the excellent progress the suit seller is making in revamping its store network as well as latching onto the explosive e-commerce phenomenon.
The City expects Moss Bros to follow a 10% earnings rise in the year to January 2017 with growth of 5% and 11% in 2018 and 2019 respectively.
Subsequent P/E ratios of 18.5 times and 16.7 times this year and next may be reasonable given Moss Bros’ great momentum if not spectacular. But dividend yields certainly merit serious attention — these register at 6.1% for 2018 and 6.4% for 2019.
Royston Wild has no position in any shares mentioned.
Roland Head: Polypipe Group
Plastic piping manufacturer Polypipe Group (LSE: PLP) has risen by 35% since its flotation in 2014. After the £145m acquisition of peer Nuaire last year, the group now appears well positioned for further growth.
Polypipe’s earnings are expected to have risen by 35% to 24.5p per share in 2016, leaving the stock on a forecast P/E of 14. A dividend of 9.8p is expected, giving a useful 2.8% yield. Management warned in January that the weaker pound had pushed up input costs, but these should be recovered through higher selling prices in 2017.
Continued strong trading in 2017 would be likely to trigger further gains for shareholders.
Roland does not own shares of any company mentioned.
Kevin Godbold: Redrow
The more I dig into FTSE 250 house builder Redrow’s (LSE: RDW) trading figures, the more convinced I become that the stock will do well during March and beyond. With a record order book and many sites sold up to six months in advance, the outlook is robust.
The recent acquisition of Derby-based regional builder Radleigh Homes will help Redrow’s growth ambitions and recent double-digit advances in revenue and profits confirm the company trades in a sweet spot. The valuation seems low given immediate prospects, and it’s therefore no surprise to find the share price in uptrend.
Kevin does not own any shares in Redrow.
Edward Sheldon: SSE
I reckon shares in utility giant SSE (LSE: SSE) offer value at present.
SSE announced in January that it remains on target to achieve a return to growth for 2016/2017, anticipating earnings of 120p per share for the financial year. The company also stated that it’s on target to hike its dividend in line with RPI inflation, and that similar increases can be expected in subsequent years.
SSE’s current yield of 5.8% is one of the highest yields in the FTSE 100 right now, and on a forward looking P/E ratio of just 12.7, I believe SSE is attractively priced given the high valuations across many other areas of the market.
Edward Sheldon has no position in SSE.
Peter Stephens: Talktalk Telecom Group
Talktalk (LSE: TALK) may turn a corner in 2017. It has experienced a difficult period after the hacking scandal of 2015. However, the company will have a new CEO in May and this could mean a new strategy, as well as improved investor sentiment.
Talktalk’s earnings are expected to increase by 10% next year, and by a further 9% the year after. This puts it on a price-to-earnings growth (PEG) ratio of just 1.1. The quad-play sector may be more competitive now than a few years ago. However, it also offers cross-selling opportunities and long-term earnings growth potential.
Peter Stephens owns shares in Talktalk.
Paul Summers: Tritax Big Box
With warehouse space at a premium thanks to the huge growth in online retail, my top pick has to be real estate investment trust Tritax Big Box (LSE: BBOX).
Boasting clients including Amazon and Tesco, Tritax already generates annual rental income of £100m from 33 standing assets. As more companies are forced to invest in similar facilities to satisfy demand, I’m confident this figure will only rise further.
Thanks to the ability to online retailers to compete aggressively on price, I also see Tritax as having defensive qualities that could be advantageous to investors as inflation rises and Article 50 is triggered.
Currently trading on 20 times earnings for 2017 and offering a 4.4% yield, Tritax releases its full year results on 14th March.
Paul Summers has no position in Tritax Big Box
Ian Pierce: Victoria
The stock I’ve got my eye on in March is tiny flooring and carpet maker Victoria (LSE: VCP). The company is growing by leaps and bounds through organic expansion and a series of targeted acquisitions.
The company’s management team also has a great track record of success. Since 2013, annual sales have more than tripled to £255m and an intense focus on costs has raised EBITDA margins from 5.8% to 12.6%.
There’s still plenty of room to expand at home thanks to a highly fragmented market, and with the company taking its first steps into the even larger European market, I reckon Victoria isn’t done growing yet.
Ian Pierce has no position in Victoria.
