We asked our writers to share their top stock picks for the month of November, and this is what they had to say:
G A Chester: Entertainment One
Media group Entertainment One (LSE: ETO) owns an extensive range of assets, including the valuable Peppa Pig brand. I believe the company is an attractive investment at a share price of 235p.
In August, the directors of Entertainment One unanimously rejected a preliminary takeover offer from ITV at 236p a share, saying it “fundamentally undervalues the company and its prospects”. I have to agree.
Entertainment One’s content library alone has recently been independently valued at $1.5bn, which is equivalent to 286p a share, and the company has excellent prospects of growing its content and earnings strongly in the coming years.
G A Chester has no position in Entertainment One or ITV.
Kevin Godbold: BTG
FTSE 250 specialist healthcare company BTG (LSE: BTG) has an impressive record of rising cash-generation due to the ongoing success of a number of product lines.
The firm expects earnings per share to swell by 46% during the year to March 2018. BTG’s business is defensive and growing fast. Should growth continue, the firm could rise to the FTSE 100 over time, or perhaps a larger firm will notice BTG’s quality and take the company over at a premium to the current share price.
My faith in BTG hinges on the quality of operations rather than the cheapness of the shares, a tactic that worked well recently with ARM Holdings, for example.
Kevin Godbold owns shares in BTG. The Motley Fool has recommended shares in BTG.
Rupert Hargreaves: Glencore
After hitting an all-time low of 70p per share at the beginning of this year, shares in Glencore (LSE: GLEN) have more than doubled in value since mid-Jan, and I expect the company’s recovery to continue throughout the rest of the year.
Glencore’s management has worked hard to reduce the company’s debt, which is now on track to fall to $15bn by the end of the year, down from $25.9bn in December 2016. Further, Glencore reported annualised free cash flow of $4.5bn in its August results, and commodity prices have only moved higher since this figure was published. Glencore’s results for the rest of the year could surprise to the upside.
Rupert does not own shares in Glencore.
Roland Head: Go-Ahead Group
Recent results from bus and rail operator Go-Ahead Group (LSE: GOG) showed a 21% rise in operating profit for last year. Shareholders were rewarded with a 6.5% dividend hike.
Go-Ahead’s share price was savaged in June, when it warned that profits on the Govia Thameslink rail franchise would be lower than expected in future years. Yet broker forecasts still suggest that earnings per share will rise by 19% to 191p this year.
The shares offer a forecast yield of 4.9% and trade on a forecast P/E of 11. In my view this is too cheap, given Go-Ahead’s strong free cash flow and sensible balance sheet.
Roland does not own shares of Go-Ahead Group.
Harvey Jones: Legal & General Group
Insurance giant Legal & General Group (LSE: LGEN) is down 20% in the past year but that only strengthens the investment case for me.
L&G enjoys a wealth of opportunities, after making an early, far-sighted move into low-cost tracker funds. It should benefit from the UK’s growing workplace pension market, as auto-enrolment beds in, and recently signed its first bulk annuity contract in the US. It is also exploring another potential boom area, equity release lifetime mortgages.
L&G offers a super-sized forecast yield of 6.8%, covered 1.5 times. Yet it trades at just 10.2 times forecast earnings.
Harvey Jones has no position in Legal & General Group
Bilaal Mohamed: Berkeley Group
It’s certainly been a painful year for long-term holders of Berkeley Group (LSE: BKG), with the post-Brexit sell-off leaving the shares trading around 30% lower than a year ago. In the four months since the historic vote, analysts have been busy revising their forecasts downwards, but not by anywhere near as much as the depressed share price suggests. I sense an opportunity!
Meanwhile, the group is still expected to return £10 per share to shareholders over the next five years, at current levels equating to a massive 8% dividend yield covered almost twice by forecast earnings. Trading at just six times earnings, Berkeley still looks oversold and offers attractions for bargain hunters, income seekers and contrarians alike.
Bilaal has no position in any shares mentioned.
Ian Pierce: Rightmove
Market confidence in homebuilders and estate agents has fallen off the proverbial cliff since the EU Referendum but online property portal Rightmove (LSE: RMV) continues to be one of the few bright stars amongst the morass of falling share prices in the sector.
This isn’t without reason. A dominant 77% market share amongst property sites, frankly astonishing 74.6% operating margins and steadily growing profits and dividends have rightly made Rightmove an investor darling.
Shares are pricey at 28 times forward earnings but a wide moat to entry for competitors and great business model still make Rightmove very attractive to me.
Ian has no position in Rightmove.
Edward Sheldon: Hikma Pharmaceuticals
With many quality FTSE 100 stocks having risen significantly since Brexit, it’s hard to spot value right now; however, one stock that has caught my eye at current levels is drugs specialist Hikma Pharmaceuticals (LSE: HIK).
Hikma shares have fallen over 30% since the company announced in August that delays in product approvals would affect 2016 profitability.
However, Hikma is viewing 2016 as a‘transitional year’as it integrates its recent acquisitions, and has stressed that it is“building a strong pipeline to support future growth.”
Three directors recently spent over £12 million on Hikma shares, and with the company now trading on an undemanding P/E ratio of 15.3, I believe the share price fall may have created an opportunity for those willing to focus on the long term growth story.
Edward Sheldon has no position in Hikma Pharmaceuticals.
Peter Stephens: Imperial Brands
The stock market faces an uncertain future and defensive companies such as Imperial Brands (LSE: IMB) could become increasingly popular. A US interest rate rise, Brexit and the US election may mean that investors adopt an increasingly risk-off attitude and seek out safer returns within the tobacco industry.
Imperial Brands also offers high growth prospects. It owns one of the biggest e-cigarette brands in the US, blu, and has exposure to high growth, emerging economies across the globe. Its yield of 4% is well covered by profit at 1.6 times. Furthermore, its P/E ratio of 15 is significantly lower than many of its global consumer goods peers.
Peter Stephens owns shares in Imperial Brands.
Paul Summers: Gear4music
I can’t help but be bullish on the medium to long term prospects for the UK’s leading online retailer of musical instruments and equipment, Gear4music (LSE: G4M)
After a fantastic run of form since August (+250%), its shares have dropped back over the last week or so as profits are taken following an impressive set of interim results. With a market cap of just £75m and a €4.3bn European market ripe for the picking, however, I still see a lot of upside ahead. Assuming strong Christmas sales, continuing excellent customer feedback and the successful opening of two new distribution centres in Sweden and Germany, 2017 could be Gear4music’s year.
Suggestions that it could become the musical equivalent of ASOS are becoming more realistic as the weeks pass.
Paul Summers owns shares in Gear4Music
Jack Tang: Whitbread
Whitbread (LSE: WTB) is my top stock pick for two reasons.
First, the company has an attractive earnings outlook. Despite concerns about cost increases and rising competition, city analysts forecast Whitbread’s earnings to grow by 14% this year and 6% for 2017/8. Although much of this growth will likely be attributable to the weaker pound, the company is making significant steps to control costs and continues to expand rapidly in the UK and abroad.
Second, shares in Whitbread will go ex-dividend on 10 November, which means investors who own shares before that date will be entitled to an interim dividend of 29.9p per share. Whitbread currently yields 2.5% and is valued at just under 15 times its expected 2016/7 earnings.
Jack Tang has no position in Whitbread.
Royston Wild: BBA Aviation
I reckon BBA Aviation’s (LSE: BBA) next trading update (scheduled for November 8th) could provide the fuel for fresh share price strength.
The aircraft services provider advised in August that the integration of Landmark Aviation is going ahead of plan following last year’s $2.1bn takeover. The game-changing acquisition is expected to become earnings enhancing from next year, and extends BBA’s global base to 189 locations, including 133 in the North American market.
This leaves BBA in the box seat to piggyback a recovery in US corporate jet activity, underpinned by the steady improvement in the country’s economy — data last week showed third-quarter GDP growth register at a forecast-smashing 2.9%
BBA Aviation’s shares surged to their highest in more than a year in October, but I reckon the business has plenty of scope for further gains. A projected 17% earnings advance for 2017 creates a P/E rating of just 14.3 times, while next year’s dividend yield clocks in at a robust 4%.
Royston Wild has no position in BBA Aviation.
