Top shares for September

We asked our writers to share their top stock picks for the month of September, and this is what they had to say:

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Rupert Hargreaves: Softcat 

Softcat (LSE: SCT) might not be a household name, but this IT company provides essential software services to businesses throughout the UK. 

Business is booming for Softcat. Back in July, management told investors in a trading update that due to “very favourable” market conditions, operating profit for the full year will be well ahead of prior expectations.

Current City figures have the stock trading at a forward P/E of around 29. I don’t see this as being too expensive. Softcat’s earnings growth has averaged 20% per annum for the past five years. And if market conditions continue to prove favourable, it’s highly likely the company will beat the City’s estimate.

Rupert does not own shares in Softcat.

Kevin Godbold: Bunzl

FTSE 100-listed distribution and outsourcing company Bunzl (LSE: BNZL) churns out growth in earnings year after year. The firm earns its living supplying stuff like food packaging, grocery, films, labels, gloves, bandages, safety consumables, and products for cleaning and hygiene. It serves businesses and organisations across several sectors.

Bunzl’s operations aren’t exciting, but there’s money in it and the company’s success has translated into steady incoming cash flow and a rising dividend over several years. In June, trading was on track to meet expectations, so I expect the share price to rise soon as value builds, perhaps as early as during September.

Kevin Godbold does not own shares in Bunzl.

Ed Sheldon: Mondi

I quite like the look of FTSE 100-listed packaging group Mondi (LSE: MNDI) at present. The shares currently trade on a forward-looking P/E of 13.8 and sport a prospective dividend yield of 3.0%.

Mondi reported half-year results in August and the numbers were decent. Benefiting from “good demand’ across its packaging businesses as well as higher average selling prices, revenue climbed 4%, cash generated from operations rose 18% and basic underlying earnings per share surged 26% to €0.89. The interim dividend was lifted 12%, signalling confidence from management.

With several brokers recently upgrading their price targets for the firm, I can see the stock’s upward momentum continuing.

Edward Sheldon has no position in Mondi.

Royston Wild: Dechra Pharmaceuticals 

Dechra Pharmaceuticals (LSE: DPH) is scheduled to release full-year financials at the top of the month on Monday, September 3. I reckon the prospect of another perky release makes now a great time to pile in.

City analysts are expecting the animalcare specialist to record an 18% earnings rise for the year ending June 2018, not a great surprise after chief executive Ian Page declared in July that sales had grown 14%, with revenues having been “driven from our core portfolio, good market penetration and recent pipeline launches.”

As this pipeline steadily cranks out the next generation of sales drivers, and recent acquisitions inside Europe and further afield continue to grow, the number crunchers are expecting earnings to keep rising by double-digit percentages, another 18% rise being forecast for fiscal 2019.

Despite its elevated forward P/E ratio of 34.5 times I reckon Dechra’s rising might in a fast-growing industry merits such a rating.

Royston Wild does not own shares in Dechra Pharmaceuticals.

Ian Pierce: Experian

My top stock this month, credit bureau Experian (LSE: EXPN) should appeal to conservative income-focused investors. The company is the world’s largest credit bureau and is experiencing consistently growing demand for its credit history services from businesses in the US, UK and Brazil. And reflecting the few competitors it has, Experian can charge premium prices, which last year resulted in admirably high operating margins of 27.7%.

High and rising margins allow management to return gobs of cash to shareholders via dividends that currently yield 1.75% annually and an even larger share buyback program. This great competitive position, non-cyclical sales and investments in related growth opportunities such as cybersecurity and data protection leave me bullish on Experian over the long term.

Ian Pierce does not own shares in Experian.

Roland Head: easyJet

The share price of budget airline easyJet (LSE: EZJ) has fallen by more than 10% from June’s 52-week high of 1,808p. I think this sell-off may have gone too far. 

During the third quarter, the group’s revenue rose by 14% increase to £1.6bn. Management say the business is on track to deliver an underlying pre-tax profit of between £550m and £590m for the year to 30 September. That’s an increase of at least 34% on last year’s figure of £408m. 

The shares currently trade on 13 times forecast earnings, with a forward dividend yield of 3.5%. I believe easyJet is now too cheap to ignore.

Roland Head owns shares of easyJet.

G A Chester: National Express

Bus and coach services group National Express (LSE: NEX) reported a strong first-half performance in July, led by 9.7% revenue growth in North America. It continues to reap the rewards of management’s consistent delivery of a strategy of targeted expansion through strategic acquisitions and entry into new high-growth markets.

I rate the stock a strong ‘buy’ right now. I reckon a current-year price-to-earnings ratio of 12.5 on forecast double-digit earnings growth and a healthy prospective dividend yield of 3.7% are highly attractive for a relatively defensive business with prospects of continuing to increase profits and dividends at a good clip.

G A Chester has no position in National Express.

Peter Stephens: Royal Dutch Shell

A rising oil price has helped to push the Shell (LSE: RDSB) share price higher. It could act as a further catalyst on the company’s valuation, with the prospect of disrupted supply being a real threat across the industry. Geopolitical risk in countries such as Venezuela and Iran may lead to demand growth being ahead of supply growth over the medium term.

Alongside the potential for a higher oil price, Shell also seems to offer a sound strategy. The company’s integration of BG appears to have moved along as planned, while a focus on improving its free cash flow could yield a stronger business over the medium term.

Peter Stephens owns shares in Shell.

Harvey Jones: Standard Life Aberdeen

The recent merger between Standard Life and Aberdeen Asset Management has yet to bear fruit, with the stock down 25% since it completed in August last year.

Standard Life Aberdeen (LSE: SLA) recently disappointed investors as half-year profits slumped 12% to £311m. Worse, it suffered £16.6bn of net outflows, with Lloyds set to withdraw a mandate worth £109bn.

Still, these concerns are now largely in the price of just 10.73 times earnings and the yield is a whopping 6.43%.

The benefits of a broader product range, larger distribution network and greater scale should eventually lift the stock, if you are willing to give it time.

Harvey does not own shares in Standard Life Aberdeen. 

Paul Summers: Asiamet Resources

Keen to capitalise on the likely huge demand for copper as more of us turn to using electric vehicles? If so, I think small-cap explorer Asiamet Resources (LSE: ARS) warrants closer inspection, especially given the news-rich period that lies ahead.

Perhaps the standout event is the soon-to-be-published Bankable Feasibility Study for its highly-promising Beruang Kanan Main project in Indonesia. With mining majors desperate to secure significant deposits to protect future profits, I reckon the company could even become a bid target once the full potential of BKM is made known.

So long as you can tolerate the volatility of the junior market — Asismet’s shares are down almost 40% from their 14p peak in March — this might be one share that could seriously reward investors in time.

Paul Summers owns shares in Asiamet Resources.

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