From this list, I’ve narrowed down my selection to just three shares. These are stocks that I already own or would be happy to buy today, if I had fresh cash to invest.

Stronger for longer

Industrial group Bodycote (LSE: BOY) specialises in heat treatment. This process adds strength and corrosion-resistance to metal components, such as those used by aircraft and automotive manufacturers.

There are obviously some cyclical risks to this business. Sales could slow during a major recession. However, Bodycote is a market leader in this sector and has traded successfully through cycles before.

The group’s international footprint and standardised offering appeals to larger customers, and management reported strong demand from aerospace and oil and gas customers last year.

Bodycote’s accounts show attractive double-digit profit margins and the group’s cash generation is generally good, supporting reliable dividend payouts.

The stock currently trades on around 13 times forecast earnings, with a 3.5% dividend yield. I think that could be a good entry point for a long-term investment.

Property recovery

There are lots of ways to play the UK property market, but there are fewer choices for investors who also want to gain exposure to international real estate.

One company that spans almost the whole market is global real estate group Savills (LSE: SVS).

Founded in 1855, Savills has expanded from a London-based agent into an international business serving clients in commercial real estate and high-end residential markets.

Because of its market reach, Savills’ results statements also tend to provide interesting commentary on property market conditions.

In the company’s most recent update, chief executive Mark Ridley said he thought that after a difficult year in 2023, “most markets appear to be past the moment of peak uncertainty”.

Mr Ridley expects to see signs of a broader recovery emerge later this year.

It’s too soon to know if this optimistic view is correct, but the Savills share price is well down from its 2022 highs and looks affordable to me. Broker forecasts suggest a dividend yield of 3.1% for 2024, rising to 3.5% in 2025.

A contrarian choice?

Chemicals group Johnson Matthey (LSE: JMAT) makes most of its profits from catalytic converters for cars, buses and trucks.

This business has fallen out of favour with investors over the last few years, due to concerns about the long-term future of the group’s core clean air business. Some growth projects – such as a planned move into battery technology – have also failed to deliver as hoped.

There are obviously some risks here. But I don’t think demand for catalytic converters will disappear any time soon, especially not for heavy vehicles.

In the meantime, the company is expanding into hydrogen fuel cells – where it has some experience.

Johnson Matthey has been in business for more than 200 years and has adapted to changing technology before. With the stock trading on just 10 times forecast earnings and offering a yield of over 4%, I think the business is starting to look cheap.

The post 3 top FTSE 250 dividend stocks I’d buy for a second income today appeared first on The Twelfth Magpie.

Both companies have paid dividends continuously for over 25 years. And both look decent value to me after this year’s market sell off.

Rotork: engineering excellence

Rotork (LSE: ROR) provides the super-reliable valves, actuators and instruments needed to keep gas and liquid flowing safely through industrial plants. The company’s heritage is in the oil and gas sector. But it’s also active in water, waste, nuclear power and the chemical industry.

Rotork was founded in 1957 and listed on the London Stock Exchange in 1968, so it has a fairly long history. Unlike some comparable companies, this firm has also stayed true to its original mission. I see that as an attraction. It suggests to me that Rotork is a market leader in its sector and has probably been well managed over the years.

Challenges ahead?

While I’m confident Rotork has a strong future, I’m aware that the oil and gas market contributed more than 40% of group profits last year. I wonder if there’s a risk that this market could shrink over time, as electric power replaces petrol and diesel.

I don’t know how the future will pan out. But I do know that Rotork has successfully evolved for more than 65 years. I think this business will probably continue to do well.

Its shares aren’t obviously cheap, trading on 20 times 2022 forecast earnings with a 2.8% dividend yield. However, this company has high profit margins, and the dividend hasn’t been cut since at least 1988.

If Rotork can return to stable growth after the disruption of the pandemic, I think the shares could be good value at current levels. Rotork is on my short list to buy.

Savills is my top property pick

Many UK housebuilding stocks offer high dividend yields at the moment. However, I think this could be a sign that the market expecting a housing slowdown.

Instead of housebuilders, I’m looking at buying a different type of property stock for my portfolio. The company I’m eyeing is international real estate group Savills (LSE: SVS).

This £1.6bn firm was founded in 1855 as a London property agent. Today, Savills operates globally. The business provides services to a range of commercial and industrial sectors, as well as wealthy individuals.

The group’s latest update confirmed that trading during the first part of the year was in line with expectations. I’m pretty confident that Savills will continue to be successful. I reckon the group’s diversity should provide some protection against recession risks.

My main worry about Savills is that its growth may have been boosted by ultra-low interest rates since 2009. With these now rising in most parts of the world, I wonder if Savills’ growth could slow.

However, I think that some risk is already priced into Savills stock. This FTSE 250 share currently trades on 10 times forecast earnings, with a well-covered dividend yield of 3.2%.

I reckon this stock looks a fairly safe buy at this level. I’m hoping to add the shares to my portfolio when I have some cash available.

The post 2 FTSE 250 shares I’d buy to target a lifelong income appeared first on The Twelfth Magpie.

Buffet, or the Oracle of Omaha as he is sometimes known, only buys equities that he believes look cheap compared to their potential. He is also looking for businesses with a solid competitive advantage, which will help them outperform the competition.

I have been using the same approach to find cheap FTSE 250 shares to add to my portfolio. 

FTSE 250 value stock 

The first company on my list is retailer Marks and Spencer (LSE: MKS). After a couple of years of struggling for direction, it now looks like this business is back on track.

The firm has been investing heavily in its food division and rejigging its clothing offering. The reopening of the UK economy after the pandemic has been a significant tailwind for the company.

It now expects to report a 380% increase in net profit for its current financial year. City analysts forecast earnings of 21.5p for the year, putting the stock on a forward price-to-earnings (P/E) multiple of just 10. 

As the fashion and retail industry is highly unpredictable, there is no guarantee this growth is sustainable. This is probably the biggest challenge the group faces right now. Rising prices could also become a headwind for company growth. 

Still, I would buy the shares for my FTSE 250 portfolio as I believe they exhibit the qualities Warren Buffett looks for in an investment. Not only is the stock cheap, but the company also has a strong brand. Consumers across the country know the company manufactures its food and clothing products to the highest quality for its price. 

This competitive advantage should help the group continue capitalising on the economic recovery during the next few years. 

Warren Buffett qualities

International estate agent Savills (LSE: SVS) is the second FTSE 250 stock exhibiting Warren Buffett qualities that I would buy for my portfolio today.

At the time of writing, shares in this organisation are selling at a forward P/E multiple of 14.9. This is not particularly inexpensive, but I also need to factor in the firm’s brand value. As an internationally recognised estate agent, I think the brand value alone is worth a premium. 

Savills’ primary market is the high-end property market. This is still subject to the cyclical nature of the global property market. This cyclicality is the most considerable risk to the company’s growth in the long run, and it is something I will be keeping an eye on as we advance. 

Despite this headwind, I think the company has all of the qualities of a Warren Buffett-style investment. Not only is the FTSE 250 stock cheap compared to its potential, but it also has a globally recognisable brand. With a dividend yield of 2.5% on offer, I think the enterprise could make a great addition to my portfolio. 

The post I’d listen to Warren Buffett and buy these two FTSE 250 stocks appeared first on The Twelfth Magpie.

Tom Rodgers: Carr’s Group

When I’m picking shares, I try to find undervalued or unappreciated companies that don’t win a lot of headlines. That’s why Carr’s Group (LSE:CARR) has pinged my radar.

Shares in the £146m agricultural and engineering business are up only 20% in the last 12 months, but the firm said in a July trading update that “order books have grown significantly” in the financial year, with higher dividends, strong cash flows and new wins in nuclear and defence. Today’s price-to-earnings (P/E) ratio of 13 looks materially undervalued to me, given the profits and net cash on offer. 

Tom Rodgers has no current position in Carr’s Group

Rupert Hargreaves: Marston’s

As the UK economy reopens, hospitality businesses such as Marston’s (LSE: MARS) are recording brisk trading.

However, the market still seems to be wary of investing in these businesses. I think this offers an attractive opportunity. Marston’s latest trading update reported that sales were 90% of 2019 levels between 12 April and 24 July. Despite this recovery, the stock is dealing 25% below its year-end 2019 price.

Of course, while sales have recovered, the firm is not out of the woods yet. Another coronavirus lockdown could send the business back to square one. Higher costs may also weigh on Marston’s growth.

Despite these risks, I’d buy this top stock in September for its recovery potential.

Rupert Hargreaves does not own shares in Marston’s.

Roland Head: Marks & Spencer

I’m feeling increasingly excited about the prospects for retailer Marks & Spencer Group (LSE: MKS). CEO Steve Rowe is prioritising food and online sales, while slimming down the store estate.

M&S’s latest numbers suggest these changes may be working. Online sales of clothing and home products rose by 53.9% last year, partly offsetting the effect of store closures. Food sales were up 6.9%, on an underlying like-for-like basis.

My main worry is that debt remains a little higher than I’d like. But borrowings are falling. With M&S stock trading on just 10 times forecast earnings, I can see value.

Roland Head has no position in any of the shares mentioned.

Zaven Boyrazian: Savills

With lockdown and travel restrictions starting to ease, Savills (LSE:SVS) is seeing a surge in buying activity from its customers. The high-end real-estate business caters to the world’s wealthiest individuals.

Over the last six months, the average selling price of Savills luxury properties was £1.9m. Thanks to increased demand, that figure is up from £1.2m compared to a year ago. With pandemic-related buying delays ending, the firm’s revenue could be about to surge for the rest of 2021 and beyond.

There’s always the threat of returning restrictions that could impede sales. However, I think the risk is worth the potential reward for this top stock in September and beyond.  

Zaven Boyrazian does not own shares in Savills.

Christopher Ruane: Games Workshop

What strikes me most about the growth story at Games Workshop (LSE: GAW) is how resilient it seems to be. By focussing on a well-defined niche, the retailer has built a competitive moat with strong pricing power. That is boosted by the company’s proprietary intellectual property. Once gamers start playing a particular game like Warhammer, they may continue for many years. Growing royalty income shows the positive business impact of this model.

A risk is that any failure to keep up with gaming fads could dent revenues.

Christopher Ruane owns no shares in Games Workshop.

G A Chester: Rolls-Royce 

The market responded positively to the recent half-year results from Rolls-Royce (LSE: RR). The company reported good progress on its cost-savings and disposals programmes. And it reiterated its expectation of turning free cash flow (FCF) positive (excluding disposals) “sometime during the second half of this year.” 

A slower recovery in flying hours than currently anticipated would hold back progress in the civil aviation division and likely the share price. However, with management also “positive on the near-term opportunities” in its defence, power systems and other businesses, I’m expecting good news on the FCF target and I see the shares continuing to advance. 

G A Chester has no position in Rolls-Royce.

Edward Sheldon: Legal & General Group

My top British stock for September is Legal & General Group (LSE: LGEN). It’s a leading FTSE 100 financial services firm that offers investment management, insurance, and retirement solutions.

LGEN posted a solid set of H1 results last month. For the six months to 30 June, operating profit was up 14% while earnings per share were up 21%. On the back of this performance, the company announced an interim dividend increase of 5%.

In my view, LGEN shares are very cheap. At the time of writing, the stock sports a P/E ratio of about 8.5 and a yield of around 6.75%. I see those metrics as attractive.

Edward Sheldon owns shares in Legal & General Group

Paul Summers: Moneysupermarket.com

The combination of rising inflation and the relaxation of travel restrictions makes me even more bullish on the outlook for comparison website Moneysupermarket.com (LSE: MONY). The former should drive people to search for savings on regular bills. The latter should allow for a strong rebound in travel insurance.

Changing hands for 19 times earnings, MONY is a quality business that still trades at a reasonable price. As a holder of the stock already, I’m happy to collect the dividends while I wait for a recovery. The shares currently yield a chunky 4.6%.   

Paul Summers owns shares in Moneysupermarket.com

Nadia Yaqub: BP 

As an income hungry investor, I was impressed by the recent half-year results from BP (LSE: BP). The rise in the oil price has clearly helped. It increased its second quarter dividend and is carrying out share buybacks. The stock comes with a 6.5% dividend yield.

Even BP’s financial position is improving. Asset disposals have reduced its net debt position. Of course, this is only a temporary measure so that it can get back on the right track. Now that economies are recovering from the pandemic, the demand for oil should rise, which should be positive for the stock.

Nadia Yaqub does not own shares in BP

Andy Ross: Flutter Entertainment  

In August, gambling company Flutter Entertainment (LSE: FLTR) reported first-half earnings that were up by 75%. It benefited from its Stars acquisition in the US and the recommencement of sporting events.  

I think given its early lead into the US gambling market, which has only really opened up as an opportunity since 2018, the company should do well for years to come.  

It’s investing a lot in the US and as a result now has a 45% share of the US online sportsbook market. It’s also expanding via acquisition. It bought Stars in May 2020 to expand its US footprint.  

The stock price has fallen in recent months, so there’s plenty of opportunity for a recovery through September. Flutter could also be a bid target for a large US group.  

Andy Ross owns shares in Flutter Entertainment.

Jonathan Smith: SSE

SSE (LSE:SSE) is a well-known energy provider. I think it’s appealing due to the push towards renewable energy output. For example, it’s aiming to treble renewable output and cut carbon intensity by 60%, all by 2030. This should see demand for shares from ESG investors.

I like the stock also from the dividend appeal. The dividend yield currently sits at 4.99%, easily above the FTSE 100 average. Finally, the utility sector is a good defensive area. This is due to inelastic demand for the services provided. The relative stability of the SSE share price could therefore offer me some protection in case we see another stock market crash.

Jonathan Smith does not own shares in SSE.

Manika Premsingh: Persimmon

FTSE 100 house-builder Persimmon (LSE: PSN) may look like an unlikely pick considering the recent cooling off in the property market. But I think there are plenty of positives to it.

One, its recent trading updates are positive. Two, its peer Taylor Wimpey’s recent results and outlook also suggest that the housing market is still buoyant. Three, interest rates are still moderate, which can encourage house buyers. Four, economic growth is expected to pick up, which can also boost demand for houses.

Five, despite significant recovery in share price since the market crash of early 2020, its price-to-earnings (P/E) ratio is still a tad below 15 times. This makes it a relatively affordable FTSE 100 stock.

Manika Premsingh has no position in Persimmon

Chris MacDonald: BP

BP (LSE: BP) remains a key beneficiary of rising commodity prices. Despite risks to commodity price increases, including a slowing of demand expectations due to the Delta variant and the potential for more supply to enter the markets, Brent Crude still trades above $70 at the time of writing.

These elevated crude oil prices should continue to drive expectations of earnings growth for BP. Year on year growth should remain strong, given last year’s depressed base. Additionally, as travel demand resumes, and economic data continues to roll in, I think the upside with BP outweighs its risk right now. Accordingly, this is a top stock I’m considering for my portfolio in September.

Chris MacDonald does not own shares in BP.

The post Top British stocks for September appeared first on The Twelfth Magpie.

A boost from half-year results

The reason for the move in the Savills share price this week was positive half-year results. On the top line, revenue grew by 18% to £932.6m. Group profit before tax was up an impressive £56.1m, although the H1 2020 profit of £7.7m was clearly impacted by the pandemic.

Even with the good results, it was noted that “travel restrictions still represent an obstacle to cross-border capital deployment”. In less fancy terms, it seems that people are still holding back on buying property abroad. So if restrictions ease into the second half of the year, there could be even further scope for growth if this particular area of business picks up.

Savills operates in 70 countries, so isn’t just focused on the UK. However, its UK market is significant and showed great growth during the period monitored. For example, UK residential transaction profit came in at £20.5m, up from £1.6m a year before.

The Savills share price jumped on these results. However, I do think that some of this positivity needs to be tempered. After all, we’re comparing it year-on-year to a terrible H1 2020. So it’s easy to beat that growth when comparing it to that period. 

Good value in the Savills share price?

After the bump higher yesterday in the share price, it currently trades around 1,210p. This is close to the all-time high at the daily close of 1,258p last year. So clearly, the price is elevated. But what about relative value?

One metric I can look at is the price-to-earnings ratio. This compares the share price to the last reported earnings. The lower the figure, often the better value the company is for a potential shareholder to buy. At the moment, the Savills P/E ratio is 26. 

In comparison, the FTSE 250 average P/E ratio is just below 25. So it looks fairly priced even with the share price gains. What about in relation to a competitor? For example, the Rightmove P/E ratio is 41. Although the business models aren’t exactly the same, they operate in the same sector. 

Based on the above, I don’t have concerns about the Savills share price being overvalued after the release of its results. However, the outlook going forward could be less positive. 

As I mentioned earlier, the UK market is a big area for Savills. The impact of the stamp duty holiday finishing could be significant. Add into the mix potential interest rate hikes next year, which could mean higher mortgage repayments. Both could be negative for revenues at the company.

On the other hand, I do think it makes sense to have exposure to property stocks in my portfolio. Given the valuation, I think that Savills is one of the best ways to achieve this. So on balance, I would look to allocate some money towards buying Savills shares now.

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The rising Savills share price

Savills is a high-end real-estate services business. In other words, it helps wealthy individuals and companies find and buy properties. The firm released its half-year earnings report this week. And, in my opinion, it was pretty impressive.

Revenue grew by double-digits reaching £932.6m in the last six months. That’s not bad. But the truly impressive result was the underlying profit growth. Pre-tax profits surged from £7.7m in 2020 to £63.8m this year. That’s more than a 700% boost.

This explosive growth appears to be primarily caused by rising house prices. On average, the value of the properties sold by Savills in 2020 stood at around £1.2m. This year, it’s closer to £1.9m. And that’s despite the fact that finding international buyers for London new-build properties has been challenging due to the travel restrictions caused by the pandemic. Meanwhile, its international commercial operations also performed admirably. So, seeing the Savills share price surge on this report seems perfectly understandable to me.

The risks that lie ahead

Seeing this level of growth is undoubtedly encouraging, especially since there were valid concerns of a sales slump due to the pandemic. However, Covid-19 still took a toll. With lockdown restrictions ravaging the economy in early 2020, the firm needed to raise capital. And it borrowed money.

As a result, total debt and equivalents have risen considerably to £657m as of June this year. This, in turn, has caused interest payments to rise. With the assets on the balance sheet, and profitability returning swiftly, these outstanding loans look manageable. But they are applying pressure to the bottom line that could impact the Savills share price over the long term.

What’s more, this pressure may start to increase in the near future. As inflation is on the rise, there is growing uncertainty regarding the potential for an interest rate hike. Suppose this were to happen. Apart from making the cost of debt more expensive, it may result in reduced demand from customers. After all, even a slight percentage increase can have a substantial effect on a million-pound mortgage.

The bottom line

Overall, it seems the worst has finally passed for Savills, and its rising share price is reflecting that. With lockdown and travel restrictions beginning to ease, I believe its revenue, and subsequently its profits, can return to pre-pandemic levels.

With dividends now reinstated, I think the potential reward is worth the risks. Therefore, I would consider adding this business to my income portfolio today.

The post What’s going on with the Savills share price? appeared first on The Twelfth Magpie.

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.

The post Top British stocks for February 2021 appeared first on The Twelfth Magpie.

Brexit uncertainty has been decking business at Savills in recent times. The colossal political and economic uncertainty has seen the number of overall property listings sink during the past couple of years. It’s a saga that remains a long way off being resolved too. The coronavirus crisis though, is a problem that threatens to rip out the heart of the market.

Sales to slump

A study by home sellers Knight Frank illustrates the point perfectly. It suggests home sales will slump 38% in 2020 to number just 734,000. A small consolation to London-focussed Savills is that there’ll be “slightly smaller falls” in Greater London and in the ‘Prime Central London’ market, according to the data. House prices nationwide will drop 3% year-on-year too, it predicts.

In sunnier news, Knight Frank expects sales and prices to rise 18% and 8% respectively in 2021. However, it doesn’t expect next year’s improved market to completely absorb the blow of this year. The agent predicts that “of the nearly 526,000 sales we expect to be ‘lost’ this year, fewer than half will be carried into 2021.”

Lockdown to last?

Its bearish analysis comes as no surprise. New sales enquiries have dived by almost half since the government published advice for would-be buyers and sellers. In line with other social distancing advice, ministers have advised homeowners “not let people visit your property for viewings”. It has also prohibited calls from estate agents, photographers, energy performance certificate experts and other professionals.

It’s hoped the lockdown measures will begin to ease by the summer. But don’t bank on it, I say. We all want to get out and about as soon as possible and the government is eager to loosen the leash. However, a sharply-accelerating infection rate would suggest current timescales could be thrown out the window. Some 5,903 more people tested positive for the coronavirus on Sunday, soaring from 3,735 a day earlier.

A dicey dividend stock

Savills has taken action on the dividend given what it deems “current uncertainty over the impact of COVID-19 on global real estate market activity in the coming months.” Last week, it said it was axing final ordinary and supplemental interim dividends. Although it added it would consider paying an enhanced interim dividend around the time of its AGM in June.

I warn against Savills shareholders getting their hopes up though. Clearly the homes market could be in a state of disarray for the next couple of years, and with this group profits could well tank.

The estate agent’s balance sheet is strong and it will look to keep it that way, given current uncertainty. This is a share, therefore, I think will likely disappoint on the dividend front in 2020, and possibly beyond too.

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Crackdown

In 2016, Chancellor George Osborne unleashed a three-pronged tax attack, and the fairytale came to an end. Some people may still make money out of it, but it is a lot harder than it was. You still have all the bother of buying a property, paying stamp duty (plus that 3% surcharge), doing it up, sourcing tenants, taking deposits and following regulations, only to pay punitive levels of tax on whatever profit you can squeeze out.

I would rather buy stocks and shares, which can be traded in seconds rather than months, with all returns tax-free through the annual £20,000 Stocks and Shares ISA allowance.

Global property play

You could even invest in the property market by purchasing a stock like international estate and lettings agents Savills (LSE: SVS). Launched in 1855, it now has global clout with 600 offices across the Americas, Europe, Asia Pacific, Africa and the Middle East.

As my colleague Roland Head recently pointed out, it operates at the higher end of the market, which can be more robust, and diversifies your exposure to property markets far beyond the UK.

The Savills share price has enjoyed a storming year, growing 30% since January, helped by the wider stock market recovery. Despite this it still trades at just 12 times forward earnings.

Cheaper money

Savills may also benefit from falling interest rates, with markets now expecting US Federal Reserve to cut interest rates in July and possibly September as well. This is part of a global trend, with Australia, Chile, New Zealand and India all cutting this year, and the European Central Bank and Bank of England increasingly dovish.

While it’s worrying that the global economy cannot afford more expensive money, this should help prop up property prices, and underpin Savills’ revenues. Savills stock currently yields 1.8% a year too. Could be worth a look.

Viva Aviva!

I’m a long-standing admirer of FTSE 100 insurance giant Aviva (LSE: AV), which also has indirect exposure to the UK property market via its equity release lifetime mortgages arm. Its main focus is on selling life, pensions, health, general insurance and investment products to millions of customers across the UK, Ireland, France, Poland, Italy, Canada and Singapore.

Just 48% of its business is focused on the UK, which gives it some Brexit ballast. It should also give your portfolio a handy income injection, with a dividend yield of 7.7% covered 1.9 times by earnings and backed by cash flow.

Turnaround Tulloch

New boss Maurice Tulloch disappointed investors in March by tying future payouts to underlying growth rather than paying a fixed ratio, while no share buy-backs are expected this year. However, he is working hard to overhaul the group in order to simplify its structure and strip out underperforming areas, which should boost Aviva stock in the longer run.

Aviva’s share price has underwhelmed, but it is up 12% over the last three months and looks dirt cheap trading at around seven times earnings. I’d buy it over a buy-to-let property.

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To try and solve this problem, I’ve selected two companies that provide essential services to the markets they serve. This is similar to the ‘picks and shovels’ approach favoured by some mining investors — you don’t know which miners will strike gold, but you do know that they’ll all need the same tools.

To make sure both companies still have some room to grow, I’ve chosen them from the mid-cap FTSE 250 index, rather than the big-cap FTSE 100. But I’ve also chosen companies that are already fairly large, with good market share and solid finances.

Testing is guaranteed

I think we can be certain that mobile and wired communication networks will continue to be an essential part of modern life. That’s why my first pick is FTSE 250 firm Spirent Communications (LSE: SPT).

This £930m company specialises in providing testing, assurance, security and analytics services for network operators. Customers include mobile networks, corporate IT departments and the automotive sector.

In my view, this business that can only become more essential as network technology continues to develop. I think the main challenge for Spirent is simply to make sure it stays in tune with changing requirements. So far, the company has managed well. Major areas of demand at the moment include 5G mobile network assurance, Gigabit Ethernet testing and GPS positioning products.

The shares trade on 18 times 2019 forecast earnings and offer a 2.6% dividend yield. That’s not cheap, but Spirent enjoys double-digit profit margins and ended last year with $121m of net cash — roughly two years’ profits.

I think there’s a chance Spirent will be acquired at some point in the future. But if it isn’t, then I expect it to continue the profitable expansion we’ve seen in recent years.

Beat the property cycle

Property is one of the oldest business sectors around, but it’s heavily prone to boom and bust cycles. That’s not ideal for a long-term investment. To get around this, I’ve selected a firm that’s exposed to more than one geographical market and more than one type of property.

The company I’ve chosen is Savills (LSE: SVS). This 160-year-old business describes itself as an “international real estate advisor.” I’d call it an estate agent or property broker, but it’s fair to say the company does a lot more than this too.

One attraction for me is that the firm is active in both residential and commercial property. Savills also tends to operate at the upper end of the market, which typically bounces back from recessions more quickly.

Only half the group’s profits come from the UK. Last year, nearly 40% of its £144m underlying profit came from the Asia Pacific region, with the remainder split between North America and the Rest of the World.

The shares haven’t escaped the general nervousness surrounding the UK property market. But they’ve done better than many locally-focused rivals and have only fallen about 5% over the last year. Trading on 12 times forecast earnings and with a well-supported 3.6% dividend yield, I think Savills could be a good long-term buy.

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