Every month, we ask our freelance writers to share their top ideas for shares to buy with investors — here’s what they said for June!
[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]
4imprint
What it does: US-based 4imprint is the world’s largest distributor of promotional custom printed merchandise.
By Ben McPoland. 4imprint (LSE: FOUR) provides its customers with branded t-shirts, golf balls, pens, bags and thousands of other items. While that may sound very niche, logo-embossed products is actually a very large market.
Last year, the firm’s revenue increased 45% and surpassed the $1bn mark for the first time. Operating profit recovered from a pandemic-hit previous year, surging 236% to $103m. It acquired 307,000 new customers throughout the year.
While trading has been strong for the first four months of 2023, management is cautious for the rest of the year in light of a potential US recession. In response, the stock recently dropped 10%. Yet I think this could provide a nice entry point for investors, particularly as it leaves the shares on a price-to-earnings (P/E) ratio of 19.5. For a fully fledged growth stock, I think that’s reasonable.
The company has no debt, continues to gain market share, and operating margins are increasing. The stock also carries a handy dividend yield of 3%. I intend to buy shares soon.
Ben McPoland does not own shares in 4imprint.
S4 Capital
What it does: S4 Capital is a digital advertising agency network that operates globally, with a strong presence in North America.
By Christopher Ruane. Looking at the share price chart for S4 Capital (LSE: SFOR) is not an uplifting activity. As a shareholder, I have been bitterly disappointed by the cratering share price. The former darling growth stock has more than halved in the past year.
But I think that means it is now a bargain. The company continues to grow at pace. Reported revenue in the first quarter grew 26.5% year on year.
The revenue risk posed by a declining ad market has hit the share price badly. But the company still expects 8%-12% net revenue growth for the full year. It has a large client base, distinctive offering and is positioned to benefit from long-term growth in digital media.
Repeatedly delayed accounts last year scared investors. The executive chairman’s recent surgery underlined the key man risk involved and hurt the shares too. But I think S4 is now undervalued given its strong growth prospects.
Christopher Ruane owns shares in S4 Capital.
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage Investment Trust is a global fund managed by Baillie Gifford.
By Charlie Keough. My top British stock for June is Scottish Mortgage Investment Trust (LSE: SMT). What I most like about the trust is the diversification it offers my portfolio. It invests in over 100 businesses, including unlisted companies such as Elon Musk’s SpaceX, which means I could gain exposure to a host of stocks under one investment.
The management team’s investment style also aligns with mine. As a Fool, I look to buy stocks and hold them for the long term. With the performance of the trust measured over a five-year period, for me this is perfect.
It’s also trading at around a 20% discount to its net asset value, signalling that the trust is undervalued. This means I can buy its holdings at cheaper than their market rate.
The trust has struggled in recent times given its weighting to China. However, as one of the world’s largest and growing economies, I think that its focus on China will bear fruit in the long run.
Charlie Keough does not own shares in Scottish Mortgage Investment Trust.
Vodafone
What it does: Vodafone operates wireless and cable telecommunications networks in countries across Europe and Africa.
By John Fieldsend. Vodafone (LSE: VOD) shares now trade at a cheap-sounding 82p after falling 31% in the last year.
That drop bumps up the firm’s dividend yield to a dizzying 9.47% at today’s price. That’s the second highest return among any company on the FTSE 100 and is well covered by earnings.
What’s more, revenues have been stable for years and free cash flow yields have turned from single digits into 19% in 2021 and 21% in 2022. That bodes well for future dividends, even if I don’t expect it will stay quite as high as at present.
The stock look undervalued too. I like the margin of safety offered by the extremely low price-to-book ratio of 0.51. And a 12.4 price-to-earnings ratio looks good value being less than the FTSE 100 average.
For these reasons, I bought shares in the company recently.
John Fieldsend owns shares in Vodafone.
