I’m on a mission to find some of the best stocks to buy in July. Should I buy all, some, or none of the following UK shares for my portfolio?
In choppy waters
The Saga (LSE: SAGA) share price is up 65% over the past 12 months. But the financial services and holidays powerhouse has slumped in the past week. A resurgent Covid-19 crisis has increased the risks for UK travel shares as the lifting of lockdown measures come under scrutiny.
Saga’s share price is particularly vulnerable to travel restrictions remaining in place. The company has a huge amount of debt on its books and its net debt to EBITDA ratio stood at a high 2.9 times as of May.
Sure, the company made some fresh financial transactions this month to improve liquidity. But these will likely prove a very temporary sticking plaster if the small-cap can’t get its cruise ships packed out and back on the high seas soon.
Theoretically, Saga’s long-term outlook remains extremely robust. Its focus on elderly customers means it should gain significantly from Britain’s rapidly ageing population. However, I believe that enormous debt pile makes it too risky in the current climate.
A better UK share?
Would Argo Blockchain (LSE: ARB) be a better destination for my hard-earned cash this July? At 135p the ARB share price trades at a significant premium to levels of 3.85p punched 12 months ago. It’s a rise which reflects soaring interest in cryptocurrencies like Bitcoin from institutional investors.
In an increasingly-digitalised world it’s feasible that digital currencies like the ones Argo Blockchain mines will become more and more popular. But I’m afraid I won’t be buying this UK tech share. The energy-intensive operations the company conducts means its shares could become increasingly unpopular at the expense of its share price. Businesses like this also have to spend lots of money to ensure their mining equipment remains at the cutting edge.
Lastly, I’m concerned about the long-term outlook for Bitcoin prices as governments and regulators refuse to give cryptocurrencies the thumbs up. The Financial Conduct Authority for example just ruled that Binance — the largest cryptocurrency exchange on the planet — cannot conduct any regulated activity in the UK.
5.3% dividend yields!
I’d much rather invest in Aviva (LSE: AV) shares next month. Sure, this FTSE 100 firm isn’t without risks of its own. Activist investor Cevian Capital has built a decent stake in the insurer and any rapid changes at the business as a result could cause significant problems.
However, I still think there’s a lot to like about Aviva today. I like the steps it has taken to offload non-core foreign assets, moves that have boosted the balance sheet and created a leaner, more efficient earnings creator. It’ll also allow the company to focus more effectively on its key UK, Ireland and Canada markets.Â
Oh, and based on current broker projections, the Aviva share price creates an enormous 5.3% dividend yield.