26th May 2015
The Share Centre says that the old adage to sell in ‘May and go away – come back on St Leger’s Day’ doesn’t always hold true. Graham Spooner, investment research analyst at the broker, gives his five top stock picks that look likely to prove the saying wrong by doing well over the summer months…
Cash-and-carry leader Booker has recently reported some impressive results along with the acquisition of Londis and Budgens. This £40m deal saw its share prices rise by more than 10%, so current investors are encouraged to stay put, as there may be more to come. The acquisition will add a significant number of stores to the group’s network. The highly regarded management have done an excellent job in a difficult trading environment and for reasons such as this, we recommend Booker as a ‘buy’ for medium risk investors looking to grow their portfolio.”
As the owner of over 1,700 managed, leased and tenanted pubs across the UK, Marston’s is a group that may well benefit you over the summer months, especially if the sun shines. It has the potential to be boosted by summer’s travel and leisure activity, with a knock on effect for investors. Marston’s full year figures were in line with market expectations, whilst March saw the news of an acquisition of Daniel Thwaites’ beer division and an agreement to supply to Thwaites’ pubs, We recommend Marston’s as a ‘buy’ for medium risk investors looking to receive income and growth from their portfolios.
As the summer months are fast approaching, travel and leisure companies are likely to receive higher levels of custom. As one of the largest low-cost airlines, EasyJet could be a beneficiary. The shares are trading on a more attractive rating, as a result of the recent fall in price. The company’s operating profit margin and return on capital have both doubled over the past four years. Investors should also note that the group’s prospective dividend yield has risen to over 3%, which is one of the better in the sector. With flights to key cities throughout the summer and profits rising helped by allowing customers to allocate seating, we currently recommend EasyJet as a ‘buy’ for medium risk investors wanting a balanced portfolio.
As the world’s largest contract caterer, Compass group has shown a strong performance over recent years. There has been good growth from its American operations, and returning growth in Europe and Japan. The group recently reported a 4.9% increase in underlying profit and a 5.7% rise in underlying revenue. With a well-diversified range of large businesses operating across dozens of countries, Compass is on track to enjoy a positive summer, as we head into the corporate entertainment season. Investors should also note that the interim dividend was raised 11% to 9.8p. Due to good sales growth and rising profit margins, we currently recommend Compass as a ‘buy’ for investors with a balanced portfolio looking to take a lower level of risk.
With warm summer months hopefully approaching, pub lunches and family meals out could keep the tills ringing at Restaurant Group, which has operations in prime positions. As the operators of over 450 restaurants and pub restaurants, the group may benefit from those in summer holiday-mode, especially at airports. Restaurant Group may well see growth over the next few months, especially as the demand in the UK could also be boosted by rising disposable incomes. For such reasons, we recommend the travel and leisure group as a ‘buy’ for investors looking to support a balanced portfolio and take a medium level of risk.