Every month, we ask our freelance writers to share their top ideas for shares to buy with investors — here’s what they said for March!
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Ashtead Group
What it does: Ashtead is a construction equipment rental company that operates in the UK and North America.
By Ben McPoland. Ashtead (LSE: AHT) rents out diggers, power generators, traffic cones, and everything in between. It has an industry-leading position in the UK, and is second in the colossal North American construction tool-rental market.
The bulk of the firm’s profits is derived from the US. So there’s a risk that earnings could take a hit were the US economy — and consequently the construction industry — to slump this year. But in the long term, I see a couple of big growth drivers.
Firstly, the US tool-rental industry is extremely fragmented, with Ashtead and its nearest competitor commanding less than a third of the overall market. That leaves a long runway of consolidation left as smaller competition is mopped up.
Secondly, the US government has signed a $1trn infrastructure bill to upgrade its own domestic supply chains. Demand for construction equipment should soar.
The stock has a reasonable price-to-earnings (P/E) ratio of 19. Plus, the company pays a small but rapidly growing dividend.
Ben McPoland owns shares in Ashtead Group.
AstraZeneca
What it does: AstraZeneca is a global, science-focused pharmaceutical company that develops medicines across oncology, biopharmaceuticals and rare diseases.
By Harshil Patel. With a market capitalisation of £178bn, AstraZeneca (LSE:AZN) is currently the largest company in the FTSE 100. But even a stock of this size has room to grow further — particularly as it demonstrates a clear strategy, dominant market position and a solid track record.
This pharmaceutical giant has been putting great focus on its oncology portfolio in recent years. And it has led to several billion-dollar blockbuster drugs. But with over 25% of its sales going towards research and development, it’s only a matter of time before we see further progress in its pipeline.
Bear in mind there are risks with drugs trials, of course, and patents can expire.
That said, AstraZeneca has been one of the FTSE 100’s top-performing stocks over the past decade. And with a P/E ratio of 18, it still looks reasonable to me.
Overall it’s a resilient, and well-run business whose shares I’d buy for my ISA in March.
Harshil Patel does not own shares in AstraZeneca.
Burberry
What it does: Burberry is a British luxury fashion brand with over 200 stores in 30 countries.
By Charlie Keough. I think Burberry (LSE: BRBY) shares could be a top buy in March. What I like most about the stock is its relative resilience to inflation, with luxury goods retailers usually offering a greater hedge than less expensive brands. This is due to their customers tending to be less squeezed by the rising cost of living.
This was seen in Q3, where store sales grew 11% (excluding Mainland China), including a strong performance in accessories.
The business’ CEO Jonathan Akeroyd has also set ambitious growth goals, including an annual revenue target of £5bn over the long term. And what I further like about Burberry is the emphasis it’s placing on returning value to shareholders. Q3 saw the firm continue with its share buyback scheme, with the majority of the £400m buyback now completed.
Sales in China have lagged behind other regions in recent times and Covid-19 always remains a lingering threat. However, with the Chinese economy beginning to re-open in 2023, I like the look of Burberry shares.
Charlie Keough does not own shares in Burberry.
GSK
What it does: GSK makes vaccines and specialty medicines for infectious diseases, HIV, oncology, and immunology.
By Charlie Carman. GSK (LSE:GSK) is a pharmaceutical stock on the rise. Following a demerger from its consumer healthcare arm Haleon last year, the company now focuses on vaccine and biotech products. A 27% rise in earnings per share for 2022 has vindicated this strategy.
Looking ahead, the firm continues to innovate. GSK has 69 vaccines and specialty medicines in its pipeline, including 18 undergoing phase III trials. Its candidate RSV vaccine for older adults shows particular promise. The respiratory virus has evaded scientists for over 60 years.
Admittedly, the outlook for GSK shares is clouded by legal battles regarding its discontinued heartburn drug Zantac. A Californian judge will determine whether the medication causes cancer when an ongoing class action concludes.
Nonetheless, I believe the product liability risks have been largely priced in. The company expects adjusted operating profit will increase by 10-12% in 2023, suggesting there’s significant growth potential in this stock.
Charlie Carman has positions in GSK.
Hargreaves Lansdown
What it does: The Bristol-based firm provides asset management services and is the UK’s most popular investment platform.
By Dr James Fox. Hargreaves Lansdown (LSE:HL.) disappointed investors in February when it published its results for the six months to December 31. The stock dropped over 10% from its peak.
However, I see this as something of an overreaction from the market. Revenue grew 20%, partially as a result of higher interest rates, and the business registered growth in terms of net new business and active clients.
This all took place during a period of economic turmoil, during which real wages and disposal income fell.
And with a forward P/E ratio of 13.5, I find the valuation is very attractive. After all, growth stocks tend to trade at a premium. The dividend yield now sits around 4.6% — above the index average.
I do worry about fresh competition in the sector, but for serious investors, I believe Hargreaves has the best platform.
Dr James Fox owns shares in Hargreaves Lansdown.
Howden Joinery
What it does: Howden Joinery Group sells kitchens and joinery products, along with the associated manufacture, sourcing and distribution of these products.
By Paul Summers: The Bank of England’s belief that the UK will enter a recession in 2023 — but that it will be shorter and less severe than previously thought — has given the share price of Howden Joinery (LSE: HWDN) a much-needed boost.
Assuming this prediction doesn’t change, I can see demand for its products recovering in advance. This could make the current P/E of 15 good value in time. Howden is also forecast to safely yield 2.6% in dividends this year.
Of course, forecasting is more art than science. There are plenty of things that could shake markets lower this year. I’m also a bit wary of the company’s rising debt levels.
But focusing on the short term is just not the Foolish way. Moreover, Howden still possesses many of the quality hallmarks I like such as high margins and returns on capital.
It’s one I’d want to own for years rather than months.
Paul Summers has no position in Howden Joinery.
J D Wetherspoon
What it does: Wetherspoon operates an estate of nearly 850 pubs and a hotel portfolio, mostly concentrated in the UK market.
By Christopher Ruane. I have held my faith in J D Wetherspoon (LSE: JDW) even as the stock lost a lot of value over the past year. Lately it has been moving up again, though. I have been buying the shares, and so too has the company’s founder and chairman, Tim Martin.
Times remain tough for Spoons, which has been trying to offload dozens of its pubs but not found buyers for all of them. The pub market continues to contract.
But I think demand will remain albeit at a reduced level – and Wetherspoon is the large-scale operator I see as best placed to meet it.
The firm has a proven business formula, an attractive customer proposition and a well-chosen selection of pubs in central locations. It has returned to profit at the operating level. With interim results due on 24 March, I think investors will focus on whether Spoons has turned from being a recovery story into a growth one again.
Christopher Ruane owns shares in J D Wetherspoon.
Johnson Matthey
What it does: Johnson Matthey is one of the world’s largest platinum refiners and catalytic converter manufacturers.
By Roland Head. I think this could be a good time to consider buying shares in FTSE 250 firm Johnson Matthey (LSE: JMAT). After a difficult period, I reckon this business is poised for a return to growth.
November’s half-year results confirmed my view that this year should be the low point for profits. The company’s guidance was for a stronger second half, as price rises helped claw back lost profits.
Admittedly, growth in electric vehicles means that the company’s automotive catalytic converters could eventually become unnecessary. However, I think they’ll remain essential for many years yet, especially for heavier vehicles like lorries.
Looking ahead, chief executive Liam Condon is focusing on hydrogen. This is widely expected to be a suitable fuel for situations where electric power isn’t practical.
Johnson Matthey has been in business for more than 200 years. I think it will remain successful. The shares look good value to me, as a long-term buy.
Roland Head does not own shares in Johnson Matthey.
London Stock Exchange Group
What it does: London Stock Exchange Group is a financial markets infrastructure and data business.
By Edward Sheldon, CFA. I’m bullish on London Stock Exchange Group (LSE: LSEG) for several reasons.
One is that the company recently announced a partnership with tech giant Microsoft. This partnership will see the two companies work together to develop next-generation artificial intelligence (AI) and cloud-based data and analytics services. London Stock Exchange believes the deal will increase its revenue growth “meaningfully” over time as new products come on-stream. UK fund manager Nick Train – who owns the stock in several of his portfolios – has described the deal as “massive”.
Another reason I’m bullish is that the shares sport an attractive valuation. As I write this, the forward-looking P/E ratio is in the low 20s. I think that’s very reasonable given the company’s competitive advantages.
One risk to consider here is net debt, which stood at £7.2bn at 30 June. This is something to keep an eye on.
Overall, however, I see a lot of appeal in this stock.
Edward Sheldon owns shares in Microsoft.
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage is an investment trust with a portfolio based around the themes of healthcare technology, decarbonisation, and digitalisation.
By James J. McCombie: The Scottish Mortgage Investment Trust (LSE:SMT) share price was hit hard when markets turned on growth and tech stocks. It is down almost 51% from November 2021’s all-time high, but the slide appears to have stabilised. Right now, I can buy a slice of Scottish Mortgage’s portfolio of high-growth companies for around 16% less than it is estimated to be worth on a per-share basis.
Scottish Mortgage’s portfolio includes foreign listed stocks (mainly US) and unlisted companies, like Space X. Getting exposure to these would be problematic to impossible for me to do directly. And they all operate in industries and sectors that I agree are ripe areas of growth.
There is, of course, a possibility that the rout on growth and tech stocks could continue or individual portfolio company failures could occur. But at this price I think the risk is well worth me bearing for the potential rewards on offer.
James J. McCombie does own shares in Scottish Mortgage Investment Trust
Team17 Group
What it does: Team17 Group is a video games developer whose products can be played across PC, console and mobile.
By Royston Wild. 2022 was a tough time for tech stocks. And while share prices have recovered ground in recent weeks, a fresh dip in investor confidence could send the sector plummeting again.
Having said that, I believe that shares in Team17 Group (LSE:TM17) could be a top buy for UK investors. The video games industry is expanding rapidly, and software developers like this might enjoy strong and sustained profits growth over the long term.
Reports of a monster £500m commercial deal between Electronic Arts and the Premier League illustrates the huge potential of this sector. Sky News reports that the deal could be worth double its existing arrangement.
I’m encouraged to buy shares in Team17 specifically following its robust trading update in January. Back then it reported “strong growth” during 2022, and advised that revenues and earnings would be “significantly ahead of market expectations.”
The developer of popular franchises including Worms and Overcooked! clearly has the wind in its sails right now.
Royston Wild does not own shares in Team17 Group.
