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Airtel Africa 

What it does: Airtel Africa provides telecommunications and mobile money services in 14 African countries. 

By Royston Wild. Airtel Africa’s (LSE: AAF) share price has slumped in recent weeks. I’d use this as an opportunity to buy a top growth stock at a discount. 

Today the telecoms business trades on a forward price-to-earnings (P/E) ratio of 6.5 times. This is far below what, say, FTSE 100 rival Vodafone trades on (the earnings multiple here sits at 10.8 times).

City analysts think Airtel’s annual earnings will rise 12% in this financial year. They are tipped to increase 11% next year, too. 

I’d buy the business to capitalise on soaring demand for telecoms and financial services products in Africa. It is the second-largest telecoms provider on the continent, and has been growing revenues and earnings by double-digit percentages for the past 17 quarters. 

Product penetration across Airtel’s portfolio remains quite low. Meanwhile, personal wealth levels in its markets are increasing sharply. I think this perfect blend should deliver excellent long-term earnings growth at the company. 

Royston Wild does not own shares in Airtel Africa. 

Somero Enterprises

What it does: Somero Enterprises designs and sells concrete levelling equipment used by construction companies worldwide.

By Zaven Boyrazian. Somero Enterprises (LSE:SOM) is a designer and manufacturer of laser-guided concrete-laying screed machines. It’s hardly the most exciting business out there, but it plays a pivotal role in the US construction industry.

With the American congress recently passing a $1trn infrastructure investment bill, management has had little trouble finding customers for its products. So, it’s hardly surprising that the group recently hit record revenues.

Despite this, Somero shares have tumbled more than 20% over the last 12 months. It seems investors are getting increasingly agitated about supply chain disruptions, which are having a significant impact on its non-US operations.

However, while frustrating, this is ultimately a short-term problem. And seeing a solid high-growth company trading at a P/E ratio of 7.3 looks too cheap in my eyes. That’s why I’m tempted to bolster my existing position by buying more at today’s stock price.

Zaven Boyrazian owns shares in Somero Enterprises.

Chemring Group

What it does: Chemring Group designs, develops, and manufactures advanced technologies for the defence industry.

By Charlie Carman. China’s rise and the Russo-Ukrainian war have boosted demand for products developed by Chemring Group (LSE: CHG). Defence budgets are expected to increase across its four home markets: the UK, the US, Norway, and Australia.

The group’s order book reached £678m in September, covering expected full-year 2022 revenues. New contracts with NATO members for the company’s countermeasures and energetics business indicate a robust manufacturing pipeline for 2023 and beyond.

Chemring’s other main arm focused on sensors and information also looks healthy. In H1 2022, this division generated 21% revenue growth and a 27% hike in operating profit.

Granted, net debt is currently £18.5m, which could limit future growth prospects. However, a 52% reduction in this figure since H1 2021 shows a positive trajectory.

In my view, significant barriers to entry in the sector contribute to the defence stock’s long-term potential, provided it remains at the forefront of developing state-of-the-art technologies.

Charlie Carman does not own shares in Chemring Group. 

Darktrace

What it does: Darktrace is a cybersecurity company, and uses AI to develop autonomous detection of cyber threats.

By Alan Oscroft. A couple of brokers have price targets on Darktrace (LSE: DARK) of around twice the current share price. I’d never buy the stock based on that, but it’s inspired me to re-examine the company.

The shares got a little overheated last year, but then crashed after some negative reports. Over 12 months, Darktrace shares have now lost around 60% of their value.

Darktrace recently reported a 46% rise in full-year revenue, with a small net profit of $1.5m. It also confirmed 2023 guidance for a 31-34% increase in annual recurring revenue. Predicted adjusted EBITDA margin is in the 15-18% range.

The company has since reported a 29% year-on-year increase in net new customers in its first quarter, reiterating its full-year guidance.

We’re looking at a forecast P/E multiple of 130 as far out as 2024. So there’s definitely valuation risk there. But I think it could be the start of sustainable growth.

Alan Oscroft does not own Darktrace shares.

Marks and Spencer

What it does: M&S is one of the UK’s biggest retailers. It specialises in selling clothing, beauty, home products, and food products. 

By John Choong. Marks and Spencer (LSE: MKS) shares are currently trading at a P/E ratio of 7. Despite the grocery industry being known for its low margins, I think M&S could be an exception and be an excellent growth stock for the long term.

It’s no secret that Marks and Spencer’s products are priced on the higher side. Therefore, it may seem contradictive to buy its stock when consumers are ‘down trading’. However, I believe that the retailer’s target market (middle and upper class) isn’t necessarily trading down in groceries. Instead, they’re trading down in eating out, and choosing to seek value in purchasing M&S’ great-tasting packaged meals. After all, Tesco indicated this trend in consumer behaviour.

With the grocer’s latest cost-savings plan and exciting lines of clothing to be launched, I think the company’s top and bottom lines should benefit over the long term as it continues to fulfil its growth plans. As such, I think M&S shares have the potential to head higher from their current levels.

John Choong has positions in Marks and Spencer.

Safestore

What it does: Safestore is a leading supplier of self-storage services in the UK and continental Europe

By Christopher Ruane. The Safestore (LSE: SAFE) share price over the past year might not suggest a compelling growth story. The shares are down 25% in 12 months.

But I think that offers an attractive buying opportunity for me to increase my stake and would consider doing so if I had spare money to invest.

In the most recent quarter, revenue grew 15% compared to the same period last year. That is part of a pattern of long-term growth I expect to continue. Self-storage continues to see growing demand in the UK. Safestore’s well-established brand can help it benefit from that. The company is developing a pipeline of new properties equivalent to around 14% of its current floor space.

A worsening economy could lead some tenants to try and cut their costs by reducing storage space. That might hurt profits. But I am upbeat about the company’s prospects and see strong growth opportunities ahead.

Christopher Ruane owns shares in Safestore.

Rightmove

What it does: Rightmove is the UK’s most popular property portal, providing advertising services to new home developers and estate agents.

By Paul Summers: Shares in property site Rightmove (LSE: RMV) have tumbled nearly 40% in 2022 as investors have become increasingly skittish over the impact of higher interest rates on the UK housing market. I regard this as an opportunity.

At face value, a P/E ratio of 21 doesn’t seem like a bargain. However, it’s far less than the five-year average of 32. This presents as an even better deal when Rightmove’s massive market share, healthy financial position, and staggeringly high margins are taken into account. 

A recovery won’t happen overnight and things could easily get worse for the stock depending on what the Bank of England decides to do about rates in early November. But it does feel like a lot of fear is already priced in.

And let’s not forget that Rightmove makes money even if the properties it lists fail to attract buyers or renters.

Paul Summers has no position in Rightmove.

Rightmove

What it does: Rightmove makes money by listing estate agents on its website and selling additional advertising products.

By Stephen Wright. My Best British growth stock to buy in November is Rightmove (LSE:RMV). I think that now could be a terrific time to add to my investment in this stock.

Right now, the UK property market is under pressure. Rising interest rates have been making mortgages more expensive and slowing down the demand for housing. 

As a result, shares in Rightmove have fallen by around 37% since the start of the year. But I’m seeing this as an opportunity. 

The company has a dominant position in an industry that typically has high margins and it generates significant amounts of cash. There might be some turbulence in the near future, but I think that the business will do well as the economy recovers.

Furthermore, the company has been buying back its own stock over the last few months. To me, this indicates that management also sees the stock as undervalued.

Stephen Wright owns shares in Rightmove.

Diageo

What it does: Diageo is a global leader in alcoholic beverages with products sold in more than 180 countries.

By Ben McPoland. Diageo (LSE: DGE) has been firing on all cylinders for many years. The British drinks giant has a portfolio of over 200 brands, including Guinness, Johnnie Walker and Baileys.

The share price is down this year, though, with the looming possibility of a global recession. Consumers, however, don’t tend to give up their favourite tipple, even during economic downturns. They are unlikely to switch from something like Johnnie Walker (the world’s most popular Scotch whisky) to a cheaper alternative. People basically put these drinks into the “affordable luxury” category.

This consumer loyalty to Diageo’s brands gives it a powerful competitive edge. And, due to its wide global presence, the company stands to benefit as disposable incomes rise in regions like Asia and Latin America.

The shares trade at a P/E ratio of 24, which isn’t particularly cheap. But I think the premium price is warranted for Diageo.

Ben McPoland owns shares of Diageo. 

I think it’s a great time to buy FTSE 100 shares to hold for the long term. The general economic and geopolitical news has been gloomy for a protracted period now. And company valuations have been driven down in many cases.

But lots of companies keep releasing positive trading updates. And many businesses are paying generous-looking shareholder dividends and buying back their own shares. I think the situation speaks volumes about the resilience of incoming cash flows.

One day, investor sentiment will turn more positive. And that could drive share prices higher. On top of that, I expect ongoing operational performance to lift company earnings for years to come. Nothing is certain, but valuations may not look as attractive as they do now in the months and years ahead.

I’ve been buying some of these decent-looking FTSE 100 stocks. But I don’t have enough spare cash to buy every opportunity I see. Nevertheless, plenty of shares now inhabit either my portfolio or my watchlist.

Connecting Africa

For example, I like the look of Airtel Africa (LSE: AAF). The company is rolling out telecommunications and mobile money services across the African continent. And recently-announced radio spectrum acquisitions in Tanzania and Zambia prove growth is on the company’s agenda.

We’ll find out more about operational progress with the half-year report due on 27 October. Meanwhile, with the share price near 125p, the forward-looking dividend yield is around 6% for the trading year to March 2024.

It’s possible that a general economic slowdown in Africa could affect earnings ahead. And the company carries quite a bit of debt. Nevertheless, debt reduction appears to be a priority with the directors. And I bought a few of the company’s shares to hold for the long term as the growth story unfolds in the years ahead.

Energy infrastructure

I also like National Grid (LSE: NG), the electricity transmission and distribution company with operations in the UK and the US. Over many years, the business has been a steady payer of shareholder dividends.

But lately, the share price has dipped lower. And I reckon that move could be linked to rising interest rates. Indeed, National Grid has had a big pile of debt for as long as I can remember. And when interest rates rise, it could become harder for the business to service its interest payments and shareholder dividends.

However, National Grid isn’t the only company in the utilities sector to suffer from this challenge. High debts tend to be an outcome for businesses that always need to invest vast sums to maintain operations.

Nevertheless, I’m optimistic that interest rates won’t rise much further than they have already. And City analysts are not predicting any dividend cuts ahead for the company. In fact, they’ve pencilled in mid-single-digit percentage rises in the shareholder payment. And that’s for the current year to March 2023 and for the year following.

Meanwhile, with the share price near 919p, the forward-looking yield for next year is running at just above 6%. I think that’s attractive and I’d aim to buy some of the shares to hold for the long term in my diversified stock portfolio.

The FTSE 100 index dipped below 6,800 last week. But it’s moved higher since and sits just above 6,900 as I write.

To put those levels in context, the index was around 7,250 a year ago. So, it’s still well down. And I’m still finding a lot of good value among the stocks making up the index.

I’m inclined to hunt in the lower reaches of the index for smaller companies. There’s a fair chance that businesses with a lower market capitalisation will have a longer growth runway ahead of them. But that isn’t always true. And it’s important for me to carry out thorough research into a business before buying any of its shares.

And I have several shares from the FTSE 100 index on my list for further research right now. My aim is to find stocks that I can hold for the long term while the underlying operational progress unfolds in a business over the coming years.

Strong trading

For example, I like the look of DS Smith (LSE: SMDS), the UK-based provider of sustainable packaging solutions, paper products and recycling services worldwide. On 10 October, the company said trading has been strong and above management’s previous expectations. 

Meanwhile, with the share price near 285p, the forward-looking dividend yield is above 6% for the trading year to April 2024. That looks attractive to me. However, it’s always possible for any business to miss its estimates. 

DS Smith carries quite a bit of debt and the business operates in a competitive sector. And any future general economic downturn could adversely affect the company. Nevertheless, I think it’s a good candidate for me to research further with a view to holding some of the shares for the long term.

An agenda for growth

I’m also keen on Airtel Africa (LSE: AAF), the provider of telecommunications and mobile money services to the African continent. In fact, I liked it so much I bought some of the shares recently.

In July, the first-quarter results report trumpeted “double-digit revenue growth, margin and earnings progression and further strengthening of the balance sheet.” And looking ahead, chief executive Segun Ogunsanya said the directors are “confident” the company will continue to deliver on its growth strategy over the long term.

For the shorter term, Ogunsanya acknowledged inflationary pressures. However, Airtel Africa is well-placed to deliver growth “ahead of the market” this year. And cost efficiencies should support profit margin resilience.

We’ll find out more about the firm’s progress with the half-year report due on 27 October. Meanwhile, with the share price near 126p, City analysts are predicting a dividend yield around 6% for the trading year to March 2024. But of course, predictions can miss the mark. 

One potential risk is Airtel Africa has a fair amount of debt on the balance sheet. And that could become problematic if trading conditions deteriorate. Nevertheless, I’m prepared to embrace the risks of share ownership. And I’m thinking of buying more Airtel Africa shares when I next get some spare cash.

Telecoms for developing economies

As an introduction, Airtel is a telecommunications and tech business with a diverse set of products. It operates in the emerging market in Africa. Currently it serves 14 countries on the continent. It is also looking to build on this existing presence. In addition to telecoms, it provides mobile money and banking services.

So what’s happening with Airtel shares currently? Well, as I write, they’re trading for 137p. At this time last year, the stock was trading for 95p. This is a return of 44% over a 12-month period.

Why I like Airtel shares

First things first, I’m buoyed by the fact Airtel is focusing its efforts on a potentially lucrative market. According to data, telecom services in Africa have increased exponentially in recent years. Furthermore, Africa is the fastest growing telecom market in the world currently. I believe Airtel could leverage its position and profile towards boosting performance and returns for a long time to come.

Moving on to Airtel shares themselves, they look great value for money on a price-to-earnings ratio of just eight. The general consensus is that a ratio of below 15 could represent value for money.

In addition to Airtel’s current valuation, the shares would boost my passive income stream through dividend payments. The dividend yield currently stands at 3.3%. This is in line with the FTSE 100 average of 3%-4%. I am conscious that dividends are never guaranteed. They can be cancelled at the discretion of the business at any time.

Lastly, Airtel has a great track record of recent performance. I do understand that past performance is no guarantee of the future. However, looking back, I can see it has grown revenue and profit for the past four years in a row. With infrastructure spending and telecoms adoption only set to grow, I believe Airtel could continue its impressive performance moving forward.

Risks to note and what I’m doing now

Despite my bullish stance towards Airtel shares, it does face some notable headwinds. Firstly, during times of economic uncertainty, like now due to soaring inflation, emerging markets are prone to more volatility. Investment for growth can be cut, and investors may turn towards safer, more developed economies and stocks. This could halt Airtel’s progress.

Next, to yield greater returns across all fronts, Airtel is required to invest significant sums of money into infrastructure. This may have a negative impact on returns moving forward.

Overall I like Airtel shares currently and plan to buy some for my holdings. Its current valuation, focus on an emerging economy with bright prospects ahead, the passive income opportunity, and recent track record all help me make my decision.

A rare tech gem in the FTSE 100

One company that has caught my eye recently is Sage Group (LSE:SGE). The software firm is an established global player with a robust business model and strong cash flow. It’s the third-largest business software provider in the world, used by over 6m people/businesses worldwide.

The company offers its products on a subscription basis and has an impressive 99% renewal rate since 2019. Sage saw its annual recurring revenue grow by 7.7% in the financial year (FY) 2021. 

Using this cash, the company has been developing its cloud storage business, which is projected to be a $40bn industry by 2030. This venture brought in £997m last year, which contributed to the 5% annual revenue growth. 

However, Sage Group primarily works with small and medium-sized businesses in the US, Europe and Asia. While its business management software sees strong renewal rates, a recession could change this. Rising bills will force businesses to cut extra costs, including software services.

But I’m still bullish on the firm given its cash-rich business model and strong global presence. Despite economic concerns, Sage’s financials make it a market leader. The tech firm is also reinvesting and expanding which is why it’s on my watchlist of top FTSE 100 shares. 

Tested product, new market

Historically, businesses with an established business model and brand strategy have found it easier to expand into global markets. McDonald’s Corp’s highly successful model is the best example.

Burgers were largely unknown in Asian countries like India and Korea. But McDonald’s is now a major force in these countries. Thanks to targeted products and marketing, the fast-food chain has established thriving businesses in very diverse culinary markets. Airtel Africa (LSE:AAF) is doing the same thing with mobile connections. 

Using the business model perfected by its parent company Bharti Airtel in India, the telecoms firm has become a premium service in Africa. The company quickly identified one key product that could put it above the competition. 

By deploying Airtel Money, a mobile-to-mobile fund transfer service, Airtel Africa tapped into one of the world’s largest digital payment networks. This attractive, low-cost model has caused Airtel Africa shares to jump over 300% since the pandemic.

The biggest threat it faces is 5G expansion and growing competition. Africa is fast becoming a target for global business superpowers. Given the earnings potential for telecom firms in the region, Airtel Africa could be undercut by giants like Verizon when bidding for 5G bands in the future. 

However, the company has been careful in securing some key territories that put it in a strong position going forward. I’m watching this FTSE 100 share very closely and could be tempted to make an investment in the coming months. 

Fast-moving consumer goods

Right now, for example, I like the look of smoking products maker Imperial Brands (LSE: IMB). In May, with the half-year report, chief executive Stefan Bomhard was upbeat. He said the company was 18 months through its five-year strategy aimed at creating “consistent” growth. And he is “pleased” with the company’s progress

And now, with the share price near 1,850p, the forward-looking dividend yield is almost 7.8% for the trading year to September 2023. Of course, a company can always miss its estimates. And it’s worth me remembering that tobacco and cigarette volumes are in long-term decline. On top of that, the industry faces intense regulatory scrutiny at times. 

However, Imperial is working hard to develop its business in new generation products that are less harmful to health. And I think the dividend yield is attractive. 

Telecommunications

I also like telecommunications and mobile money services provider Airtel Africa. As the name suggests, the company’s operations are in Africa. In July, the quarterly update trumpeted “double-digit revenue growth, margin and earnings progression, and further strengthening of our balance sheet”.

Chief executive Segun Ogunsanya said the company is targeting growth “ahead of the market” this year. He reckons the business has “attractive” opportunities for sustainable and profitable long-term growth. And that’s because the market is “underpenetrated” for mobile voice, data, and mobile money services.

Earnings appear to be growing by double-digit percentages each year. However, the business was loss-making as recently as 2018. And there’s always the risk that operational challenges could derail the pace of growth in the years ahead.

Nevertheless, City analysts predict some generous hikes in the dividend ahead. And with the share price near 153p, the forward-looking yield for the trading year to March 2024 is a chunky 4.9%.

Mining industry services

Finally, I like mining services company Capital (LSE: CAPD). In July, the company delivered a robust second-quarter trading update. The directors said the business had seen “extremely strong” demand and the outlook is “supportive”.

It’s worth me remembering that Capital serves a cyclical industry. And in any downturn, volumes and profits could plunge. However, there’s no sign of weakness at the moment. City analysts predict a rebound in earnings of around 35% in 2023. And they think the dividend will rise by double-digit percentages this year and next.

Meanwhile, with the share price near 94p, the forward-looking yield for 2023 is just above 5%. I see that as attractive and feel the recovery in the business may have much further to go. I’m prepared to hold on to my Capital shares until well beyond any near-term recession that may affect the world’s economies.

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Scottish Mortgage Investment Trust 

What it does: Scottish Mortgage invests in a global portfolio of companies through a mix of listed and unlisted shares.  

By Charlie Keough. My top British stock for August is Scottish Mortgage Investment Trust (LSE: SMT). I’ve long been a fan of this equity. And with its share price taking a hit this year, I think this offers a great time for me to buy. 

The management team aims for growth over a five-year period. And while past performance is no guarantee of future returns, the last five years have seen the trust return around 100% to shareholders.  

Scottish Mortgage has suffered this year due to its focus on growth stocks. While these may continue to stall in the near run, over a more extended period I think the trust has the potential to provide me with some substantial returns (like it did when buying Tesla in 2013). 

Ongoing struggles in China, along with the likely potential of inflation continuing to dampen investor confidence, could see the stock slip. However, I’d buy the stock in August as a long-term hold.  

Charlie Keough does not own shares in Scottish Mortgage Investment Trust. 

Premier Foods 

What it does: Premier Foods manufactures a broad range of foods and ingredients like cakes, custard, cooking sauces and gravy.

By Royston Wild. Purchasing shares in food producers like Premier Foods (LSE: PFD) has traditionally been a popular play for investors during tough economic times. Food is one thing that people don’t stop spending on when times get tough. 

But businesses like this aren’t risk-free at the moment. Spending is plummeting at an alarming rate as the cost-of-living crisis worsens. The Office for National Statistics says that 50% of Brits are buying less food when doing the food shop. 

But in this climate I’m encouraged by how resilient trading at Premier Foods has remained. Revenues here rose 6% in the 13 weeks to 2 July, meaning the business remains on track to meet full-year expectations. 

I like Premier Foods because it sells food at the value end of the market under brands like Batchelors. Furthermore, I appreciate the excellent brand power of products like Mr Kipling cakes and Homepride cooking sauces. Volumes of beloved labels like these tend to remain more stable during downturns.

Premier Foods trades on a forward P/E ratio of just 10.2 times. I think this makes it a top value stock to buy in August. 

Royston Wild does not own shares in Premier Foods. 

Experian

What it does: Experian is a British technology company that specialises in consumer credit data.

By Edward Sheldon, CFA. FTSE 100 company Experian (LSE: EXPN) has seen its stock price pull back in 2022 and I think this has provided an attractive buying opportunity in August.

A trading update posted in mid-July showed that the company has momentum at present. For the three-month period to 30 June, total revenue was up 7% year on year. Meanwhile, looking ahead, the company said that it expects total revenue growth of 8-10% for the year ending 31 March 2023.

As for the stock’s valuation, it seems quite reasonable to my mind. With analysts currently expecting the group to generate earnings per share of around $1.36 this year, the P/E ratio here is around 25. I don’t see that as excessive given Experian’s market dominance, growth rate, and high level of profitability.

Of course, if the tech sector continues to experience weakness, Experian shares could underperform in the near term. Taking a long-term view, however, I see the risk/reward profile here as attractive.

Edward Sheldon owns shares in Experian.

International Consolidated Airlines Group

What it does: This company is an airline conglomerate that operates across the entire globe. It owns a number of well-known airlines, including British Airways, Aer Lingus, and Iberia.

By Andrew Woods. International Consolidated Airlines Group (LSE:IAG) was battered as the pandemic made its way around the world. This was primarily because countries shut their borders and virtually all commercial flights were grounded.

The result was that IAG swung to a €7.8bn pre-tax loss in 2020 as its income sources became ever more limited. This forced the firm to issue new shares to raise capital in the midst of the crisis.

In 2021, however, pre-tax losses more than halved to €3.5bn. During an update for the first three months of 2022, it stated that it may even return to profitability in the middle of this year. In those first three months, revenue climbed to €3.4bn compared to €963m for the same period in 2021.

Although passenger capacity is improving, recent cancellations due to staff shortages could delay progress. Nevertheless, I think August may reveal that IAG has once again hit calmer skies and I’ll be adding more shares if it does.

Andrew Woods owns shares in IAG.

Fresnillo 

What it does: Fresnillo is the world’s largest primary silver producer and Mexico’s largest gold producer, with seven operating mines. 

By G A Chester. Fresnillo (LSE: FRES) has been through a difficult few years. Covid disrupted its operations quite severely at times. And the introduction of new labour legislation last September also presented challenges. 

However, management recently reported a solid second quarter of production in line with its expectations. It said this was despite some continued impact from the pandemic. 

The company’s also made good progress in adapting to the Mexico labour reform. This required it to internalise a high proportion of its contractor workforce. It said its recruitment and training campaigns are proving effective and that it should complete the process by the end of the year in its underground mines. Meanwhile, it said its open pit mines are now fully staffed. 

With operations normalising, a Covid-delayed major growth project ready to ramp-up, and a good pipeline of further development projects and exploration prospects, I think Fresnillo is ripe for a recovery. 

G A Chester does not own shares in Fresnillo. 

Ibstock

What it does: Ibstock is the UK’s leading manufacturer of clay bricks and concrete products used by the construction industry.

By Zaven Boyrazian. The property market is notoriously cyclical. And with the Help-To-Buy scheme coming to an end soon, it’s possible for a downturn to be arriving soon. However, when it comes to long-term demand, the need for housing isn’t going anywhere. And that’s terrific news for my top stock to buy for August, Ibstock (LSE:IBST).

The brick manufacturer has suffered quite a few disruptions from Covid-19. However, those woes seem to be in the past and business has begun to ramp up again.

Its latest interim results demonstrated double digit growth for revenue and profits thanks to an uptick in sales volumes. Meanwhile construction for its new Atlas and Aldridge redevelopments continue to be on track for completion for the end of 2023.

Once brought on-line, these facilities will expand the firm’s manufacturing capacity by 115 million bricks per year. And given Brexit has made importing bricks far more expensive, the firm may be in a prime position to capitalise on the opportunity.

Zaven Boyrazian does not own shares in Ibstock.

Moneysupermarket.com

What it does: Moneysupermarket.com operates price-comparison sites for money, home services, money, insurance and other products

By Paul Summers: I’ve been banging the drum on Moneysupermarket.com (LSE: MONY) for some time now. Unfortunately for me, other investors haven’t agreed with my bullish view and the share price is still down 18% in the last year. The inability of consumers to switch energy suppliers hasn’t exactly helped.

Despite this, I’m in no mind to sell my holding. Quite the opposite.

Earlier this month, the company stated that revenue had grown 19% over the first six months of 2022. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10%, which was ahead of expectations. The interim dividend was maintained too.

With consumers trying to save money where they can, I think this positive momentum can continue. At just below 16 times earnings as I type, the stock still trades at an attractive valuation and there’s a 5.7% yield in the offing if the full-year payout is kept steady.

Paul Summers owns shares in Moneysupermarket.com

Airtel Africa

What it does: Airtel Africa is a leading operator of telecoms networks and mobile money services in Africa.

By Roland Head. Shares in Airtel Africa (LSE: AAF) have doubled since the company floated on the London Stock Exchange three years ago. I think further gains are likely.

Recent first-quarter results showed revenue up by 13% to $1,257m during the three months to 30 June. This growth was mainly due to a 25% increase in mobile money revenue and a 20% rise in data revenue.

Many African countries lack the formal banking networks and fixed-line telecoms services we take for granted. I think that demand for internet and financial services will continue to be driven by rising mobile usage.

One possible risk is that Airtel Africa carries a fair amount of debt — $3,056m at the last count. However, debt is falling, and cash generation is strong.

Airtel shares trade on 11 times forecast earnings, with a 3% dividend yield. I see the stock as a long-term buy in August at this level.

Roland Head owns shares in Airtel Africa.

Compass Group 

What it does: Compass Group is a FTSE 100 global leader that runs workplace canteens for thousands of organisations across 44 countries.  

By Harshil Patel. Given soaring food prices, some might be surprised that I think it’s a good idea to buy food services provider Compass Group (LSE:CPG). But it’s rising food and energy costs that are pushing more organisations to outsource this function.  

As a specialist in the field, Compass has a better chance to provide catering functions at lower cost and greater flexibility. 

Compass says that it’s winning new business. And that has helped it to raise its sales growth predictions for the second time this year. I reckon it’s a trend that could continue into next year.  

Whereas finding the right staff is a challenge plaguing many organisations right now, Compass seems to be managing relatively well.  

Now, as it’s a physical business, any further pandemic-related disruptions could affect earnings. However, all things considered, I’m banking on its strong cash flow, earnings growth and dividend growth to provide me with solid shareholder returns. 

Harshil Patel does not own shares in Compass Group. 

Background and operations

Owned by Indian telecom giant Bharati Airtel, Airtel Africa has quickly risen to become one of the top mobile service providers in Africa, operating in 14 developing economies on the continent. 

I am very bullish on companies with a focus on emerging economies in Asia, Africa, and South America. These regions have populated cities, a growing middle class, and rising disposable income, making them excellent marketplaces for developed market staples.

And given the low internet and mobile penetration in Africa, it is a relatively underexplored telecom market with enormous scope. The 14 sub-Saharan countries that Airtel Africa operates in have the highest projected population growth rates in the world. And Airtel is keen on establishing a thriving mobile network that could generate a loyal consumer base for decades.

Finances

In 2022, Airtel Africa registered 128.4m mobile phone customers (118.2m in 2021) along with 46.7m data customers and 26.2m Airtel Money users. The FTSE 100 company’s revenue grew by 23.3% in 2022 to US$4.71bn and operating profit grew 39% to $1.53bn. Basic earnings per share saw a huge jump of 86.5% and are currently at 16.8 cents.

Rising smartphone affordability in Africa and the growing youth population are big reasons behind this FTSE 100 share’s growth. Over the next five years, mobile connections are expected to grow at a compounded annual rate (CAGR) of 4.9%.

Africa is also a huge market for digital payments. In fact, in 2021, Africa accounted for 70% of the total value of mobile money transactions globally. And Airtel Money, the brand’s digital money transfer app, was its fastest-growing product in 2022, bringing in $553m, up 34.9% from 2020. 

If Airtel Money grows at the current rate, it could become a major player in the digital payments sector in Africa which could potentially make the FTSE 100 firm billions in transaction fees.

Concerns and verdict

Currency devaluations in the region are a big concern. If valuations fluctuate a lot, it could hurt the company in the long run. Also, regulations and competition in the digital payment space are always a concern. Big players like Mastercard could choose to step up efforts in the thriving market, making it tougher for Airtel Money. 

However, the African market is huge and Airtel Africa already has a firm foothold. It is ranked in the top two mobile service providers in 13 of the 14 countries it operates in. And its shares are currently trading at 172p at a price-to-earnings ratio of 12 times. I think this makes it an excellent bargain growth option because analysts expect similar growth figures next year as well. The FTSE 100 share has gone up over 25% in the past month but I am considering an investment at current levels as they look cheap for my growth portfolio.

Tapping into African telecommunications

Airtel Africa (LSE:AAF) has enjoyed upward movement in its share price. In the past year, the shares are up 92%, while in the last month they’ve gained 14%. At the time of writing, they’re trading at 160p. 

For the year ended March, revenue climbed 21% to $4.71bn, while the firm – a telecommunications business in east Africa – reported that pre-tax profits surged by 75% to $1.22bn. It’s important to note, however, that continued profit growth is not guaranteed.

Much of this is down to the company’s success in expanding its customer base. Over the same time period, this grew by around 9% to a total customer base of nearly 129m. Furthermore, revenue per customer rose by 15%.

It’s always possible that future balance sheets may be hit by issues such as inflation and energy costs. This could lead to a fall in the share price over the long term.

However, the firm clearly has growth potential and is expanding its operations into the Democratic Republic of the Congo (DRC), investing $42m to support its wireless broadband rollout there

A recovery stock?

Second, Whitbread (LSE:WTB) is a company that was hit hard during the pandemic. Shares in the business are down 9% in the last year and have fallen 15% in the past six months. At the time of writing, they’re trading at 2,652p. 

The firm – an owner of UK hotels and restaurants – slumped to a £1bn pre-tax loss for 2020. It’s possible, however, that a recovery is now in progress. During 2021, the business reported a £58m pre-tax profit.

Additionally, for the first three months of 2022, sales were up over 200% year-on-year. Compared to pre-pandemic levels, they’re still up 21%. Most hotels and restaurants have now reopened as restrictions have been scaled back.

However, the company expects cost inflation for 2022 to be around 8%-9%, which is about 1% higher than previous forecasts. This could start to weigh heavily on Whitbread’s operations and balance sheet as ingredients for use in restaurants become more expensive. Additionally, energy costs will inevitably rise as a result of tighter supply due to ongoing geopolitical issues, like the war in Ukraine.

Yet both of these companies still look like attractive prospects for investment this month. While there are, of course, risks involved with both purchases, it seems like the underlying businesses are financially solid. With Airtel Africa’s controlled expansion into the DRC and Whitbread’s comeback after the pandemic, I think I could be picking up two winners. I’ll be snapping up the shares of both businesses soon.  

African telecommunications

Airtel Africa (LSE:AAF) is a telecommunications and mobile money company with 118.2m customers in 14 African countries. The company aims to connect a continent that struggles with large distances between communities and poor infrastructure.

The FTSE 100 company saw a 14.2% increase in revenue in 2021 with the three key services of voice, data, and mobile money all growing. It was noted in its recent annual report that, “Mobile and digital penetration is low and populations are young and growing fast“. This shows there remains considerable growth opportunity within the sector. The company is the market leader in the majority of the countries it operates in, which puts it in a great place to reap the rewards from this growth.

Some challenges lay ahead for this FTSE 100 company. Due to the scale of Africa, there are challenges in connecting remaining isolated areas to mobile and data networks. The costs of adding an extra person to the network will continue to rise, which will put a strain on profits.

The shares currently trade with a price-to-earnings ratio of only 9.9, which is better than the majority of FTSE 100 shares. I’m excited by the growth opportunities that lie ahead for the company, which is why I added this company to my portfolio.

A FTSE 100 engineer

Spirax-Sarco (LSE:SPX) is a British engineering giant with a global presence in several niche industries. The company manufactures steam systems, peristaltic pumps, and electric heating units. This isn’t going to get anyone’s heart racing. However, I don’t mind that. I think that ‘boring’ shares are often overlooked. The shares are down 33% in 2022.

Spirax-Sarco coped well with the pandemic with revenue only falling 4% from £1.24bn in 2019 to £1.19bn in 2020. Revenue reached £1.34bn in 2021 with the company reporting a record operating profit of £340.3m. Alongside this, 50% of revenue comes from equipment maintenance. As industrial customers can’t just decide not to maintain their equipment, this has given Spirax-Sarco a resilient income stream.

However, there are a few upcoming challenges. Lockdowns in China have left a Shanghai factory running at lower capacity, which could leave customers with longer order waits. Alongside this, rising inflation is causing its own challenges. Demand for new machinery may drop as companies try to cut down on costs.

The shares are currently trading with a price-to-earnings ratio of 34 and a dividend yield of 1.27%. I wouldn’t consider this incredible value compared to some other FTSE 100 alternatives.

Overall, I think the positives still outweigh the negatives. The company has shown incredible resilience over the last few years and I see this set to continue. That is why I added Spirax-Sarco shares to my portfolio.