The iron ore miner’s shares spiked in value in the first quarter as prices of the steelmaking ingredient ballooned. But they’ve fallen heavily from the year’s highs struck in April amid soaring worries over the global economy.

Could this represent a top dip-buying opportunity for me?

An attractive dividend stock

I’ll begin by spelling out why Anglo American’s share price looks cheap based on widely-used metrics.

City analysts think the mining stock’s earnings will slump 22% this year. But at £28 per share Anglo American trades on an attractive forward price-to-earnings (P/E) ratio of just 5.5 times.

This is well below the FTSE 100 average of around 14 times.

As a value investor I’m also drawn to the share’s huge dividend yield. This sits at a healthy 7.7% for 2022, almost double the Footsie average.

In spite of its uncertain near-term outlook Anglo American’s enormous dividend projections don’t look fanciful either. For 2022 the anticipated payout is covered 2.4 times by expected earnings, providing a wide margin of safety.

Near-term dangers

There’s no doubt that the mining sector faces huge challenges as economic conditions worsen. This FTSE 100 stock is being weighed down particularly badly by a slowdown in the steelmaking sector.

Analysts at S&P Global have warned that things could get even more difficult. It said today that “iron ore prices in Asia will continue to grind lower in the fourth quarter as steel production cuts intensify during the winter season.”

Weak activity could persist into 2023 and beyond too. China’s property sector is locked in a slump and central banks remain committed to hiking rates.

This is especially problematic for Anglo American as it generates a third of revenues from the iron ore and metallurgical coal sectors (26% and 7% of group turnover respectively).

A top dip buy

The question is whether Anglo American’s share price fairly reflects the frosty economic environment. As a potential investor, I think a case can be made that it does.

I also believe the mining giant could recover strongly from current levels once the global economy picks up. The long-term demand outlook for iron ore remains pretty bright amid rapid urbanisation in emerging markets and infrastructure updating programmes in the West.

And I like Anglo American too as its diversified asset base protects overall earnings from weakness in one or two markets, as the map above shows. Additionally, its wide portfolio gives it multiple ways to make money from the green economy.

Sales of its copper and nickel are likely to soar as electric vehicles take off. Growing demand for green hydrogen also means demand for its platinum — a catalyst in the gas-making process — might rise strongly.

I expect Anglo American’s share price to rebound from current levels. And given its low P/E ratio and huge dividend yield I think now’s a great time for me to buy.

Mining for dividends

Anglo American (LSE:AAL) shares are down 22% over the last three months and, at the time of writing, they’re trading at 2,691p.

In 2021, the mining giant paid a total dividend of $4.19. That currently equates to a dividend yield of 7.33%, although it’s worth noting that dividend policies could change at some point in the future.

However, for the six months to 30 June, the business reported a 17% fall in revenue and a 29% decline in profit, year on year. This led the company to cut its interim dividend by 27%, to $1.24.

This may seem disappointing to shareholders, but the results require some explanation. Much of the negative news was down to a couple of hopefully-short-term issues. Namely, the war in Ukraine, which has tightened commodity markets, and supply chain problems that have arisen after the pandemic.

There remains, however, long-term demand for many of the materials that Anglo American produces. Copper, for instance, is critical for use in electric vehicles and silver is an essential component in solar panels.

Furthermore, the business has operating cash flow of $13.18bn, suggesting that it’s in a financially healthy state. 

Income at lightning speeds?

The BT (LSE:BT.A) share price has fallen 14% in the past month, and is currently trading at 147p.

For the year ended March 2022, the firm paid a total dividend of 7.7p. At the time of writing, that equates to a dividend yield of 5.08%. While this isn’t as high as Anglo American, it’s still attractive.

The telecommunications business reported mixed results for the three months to 30 June. While revenue grew 1% to £5.1bn, profit decreased by 10%. Much of the latter result can be attributed to cost inflation, which is beginning to shrink profit margins. 

Despite this, the company still expects full-year free cash flow to sit between £1.3bn and £1.5bn.

Additionally, there remains high demand for the 5G network that BT has been rolling out. This could have a positive impact on future balance sheets.

Last week, it was also reported that the UK government is dropping its investigation into the actions of French billionaire Patrick Drahi. He increased his stake by around 50% in December and now owns around 18% of BT shares. 

There has been speculation that he’s attempting a slow-motion takeover, which could lead to a rise in the share price if true. 

Overall, these two businesses have attractive yields and, given their long-term potential, I’ll use my spare £1,000 to add both to my portfolio soon.

Mining giant

As a quick reminder, Anglo is a global mining business. It has many assets and a presence in Africa, Europe, the Americas, and Australia. Anglo produces a range of metals and other natural resources, including gold, platinum, diamonds, coal, base and ferrous metals, industrial minerals, and more.

So what’s happening with Anglo shares currently? Well, as I write, they’re currently trading for 2,980p, which is very similar to levels seen at this time last year when the stock was trading for 2,984p. Since the turn of the year, however, the shares have been pushed down due to macroeconomic factors and the events in Ukraine. Between mid-April to now, shares have dropped by 28%, from 4,155p to current levels.

A FTSE 100 stock with risks

I see two main issues linked to buying Anglo shares. First of all, the commodities market is a volatile one and is intrinsically linked with the state of the world economy. This volatility can have an effect on demand, which in turn can also affect balance sheets, performance, and returns.

This leads me nicely to my next point. The current state of the world economy, and its fragility, caused by macroeconomic headwinds, is a concern. Soaring inflation, the rising cost of materials, and the supply chain crisis could impact Anglo shares. Rising costs put pressure on profit margins, performance, and returns.

The bull case and my verdict

Let’s look at the positives then. I noted that the commodities market can be volatile, but I believe certain firms are somewhat immune to this. In my opinion Anglo is one such firm. This is usually due to their sheer size, global footprint, and financial strength. I believe it has the necessary tools to navigate current headwinds to continue to perform consistently and boost investor returns.

So what level of returns am I looking at currently? Well, the dividend yield of Anglo shares looks attractive to me currently at 6%. This is higher than the FTSE 100 average of 3%-4%. Furthermore, it has also paid a dividend consistently since 2006. I am conscious that dividends are never guaranteed, however.

Next, Anglo’s drop in share price has made the shares look good value for money on a price-to-earnings ratio of just six. I’m confident that the share price will head upwards once more too.

Finally, Anglo has a good track record of performance to underpin returns and growth too. I am aware that past performance is not a guarantee of the future, however. The pandemic affected its revenue and profit levels but I note that 2021 was its biggest revenue generating year ever and it posted revenue far surpassing pre-pandemic levels. Although this may have been due to pent-up demand, I am buoyed by such performance.

Overall, I believe Anglo American is a top FTSE 100 stock that could boost my portfolio now and for the foreseeable future. I would happily add the shares to my holdings.

Key points from the report

Underlying EBIDTA for the first half of the year fell by 28% when comparing it to the same period last year. Production output fell, mostly hindered by steelmaking coal and iron ore. Given that the business has a dividend payout policy of 40%, the fall in profits was always going to be reflected by a cut in the dividend per share.

As a result, the interim dividend per share was $1.24, down 27% from the $1.71 paid out last year. Don’t get me wrong, paying out a total of $1.5bn as an interim dividend is a lot, but when you break it down versus what investors were expecting, it’s not that exciting.

Aside from the numbers, the other priority being focused on is health and safety. Eliminating fatalities is clearly one element of this. However, the broader part of it is having a thriving workforce, which will ultimately help to boost efficiency and profits in the future.

The impact on the Anglo American dividend

There are two parts that go into calculating the dividend yield. One is the dividend per share. The fact that this has fallen negatively impacts the yield. However, the other part is the share price. Fortunately, the fact that the share price is down 11% in the past month has meant that the dividend yield fall has been cushioned. After all, even if the dividend per share is lower, if the share price is also lower then this goes some way to offsetting the impact.

The current yield is 7.25%, down around 0.5% from yesterday by my calculations. This does mean that other commodity stocks such as Rio Tinto and Antofagasta have higher yields.

Looking forward, I don’t think it’s right for me to completely ignore Anglo American shares due to the dividend cut. For a start, it might have a lower yield than peers, but it’s still well above the FTSE 100 average of 3.72%.

Further, it’s important to remember that the H1 results were the second best ever, only beaten by last year. This gives more context to both the position of the business and the dividend outlook. Sure, the figure dropped, but it was competing against a bumper 2021. Therefore, if the dividend per share can remain at current levels, I still think this is more than enough.

The Anglo American share price is down 10% in the past year. This has pushed the price-to-earnings ratio down to a low figure of just 4.67. So even though the dividend has been cut today, I’m still looking to buy the stock for long-term income and potential capital gains.

Flying into clearer skies

International Consolidated Airlines Group (LSE:IAG) has suffered greatly over the past three years. With flights grounded and borders closed, the airline conglomerate was completely pummelled by the pandemic restrictions. I bought some of its shares in the middle of the pandemic, in 2020.

Over the past year, the shares are down 32.67%, while in the last three months they’re down 20%. At the time of writing, they’re trading at 113p.

Its problems aren’t over yet, either. The group faces cabin crew shortages and the threat of strike action. Furthermore, surging oil prices have resulted in higher jet fuel prices.

However, the firm expects to return to profit after the second quarter of 2022, while forecasting that passenger capacity for this year will be 85% of 2019 levels.

Enjoying higher interest rates

Shares in HSBC (LSE:HSBA) are up 25% in the last year, though down 3% over the past month. They’re currently trading at 519p.

The global banking firm is currently benefiting from higher interest rates. In the UK, these have reached 1.25% and it’s likely they’ll rise even further. These are important when analysing bank stocks, because they largely dictate how much a bank like HSBC may charge for its loan and mortgage products.

While there’s the chance that higher rates might eventually deter people from taking on more debt, HSBC has already benefited financially from rate hikes. Between 2020 and 2021, pre-tax profits grew from $8.7bn to $18.9bn.

HSBC is a truly global company and, while this has many advantages, it may also make it more vulnerable to a variety of geopolitical issues in every corner of the globe. 

A steely mining firm

Anglo American (LSE:AAL) has enjoyed higher profits in the past year as base metal prices have surged. However, the shares are down 14% in the past year and 28% in the past month. At the time of writing, they’re trading at 2,633p.

In 2021, revenue soared by 63% to $41.6bn on the back of higher commodity prices. The firm – a base metals miner and producer – saw its pre-tax profits more than treble to $17.6bn.  

In addition, the business announced that it had extracted the first copper from its Quellaveco mine in Peru. This mine is forecast to produce around 300,000 tonnes of copper per year. This is promising, given that global demand for copper is set to increase. It’s a key component in products like electric vehicles, for example.

However, the company is always at risk from shrinking balance sheets due to cost inflation.

Overall, these three firms are all benefiting from favourable conditions. I’ll add these stocks to my portfolio in the next few days and top-up my IAG holding. Furthermore, I’ll keep a close eye on their performance with a view to buying more shares on market dips.

The diversified global mining giant has seen its share price collapse by 22.95% in the last month, and 12.45% in the year to date, as central banks turn increasingly hawkish to counter ballooning inflation, particularly in energy markets where costs are soaring due in part to the war in Ukraine.

Holding out hope for Anglo

Despite the bearish shift in the mining industry of late, it would be wise to factor in long-term structural demand trends for the mined materials that will be key to powering the net-zero economy.

Anglo American produces a number of these strategically important minerals and metals, including copper, platinum group metals (PGMs), nickel and manganese, in addition to a staple of traditional metals like coal, iron ore and gold.

Since taking the reins from long-standing chief executive Mark Cutifani late last year, Duncan Wanblad has pledged to make further investments in projects targeting the above-mentioned critical minerals and deliver company-wide carbon neutrality by 2040.

The signs looked good earlier in the year, when Anglo posted record full-year earnings for 2021 and bumped up shareholder payouts to total $6.2bn for the year.

However, weak Q1 production figures and darkening projections for the global economy have dented investor confidence in Anglo and its mining peers on the London market.

While the prospect of a worldwide recession could certainly impact demand for industrial metals, particularly in ‘key commodities’-consuming China, this slowing demand picture is tempered by the world’s need to electrify major areas of the global economy – and fast.

Well positioned for the copper boom

Take copper for example. The red metal is required in significantly greater quantities in the making of an electric vehicle (EV), as opposed to an internal combustion engine car.

And with the majority of car-manufacturing companies now putting all of their eggs in the EV basket, the demand story for copper looks very rosy. This is without even considering soaring copper demand from the renewable energy sector.

In June, Anglo started commissioning its vast Quellaveco copper mine in Peru – a $5.3bn project that will produce 300,000 tonnes of copper per year for the first 10 years at full production.

And earlier this week, Anglo reported first production of copper concentrate from the sizeable project, which was delivered on time and on budget.

Having held a small shareholding in Anglo for several years, I will be looking to increase my stock position during the current dip, based on Anglo’s delivery of Quellaveco and its diversified commodity portfolio, which could prove to be a rewarding endeavour in the long term.

Monday’s fall extended losses over the past month. So maybe the current dip is a good time to buy? Or perhaps this stock isn’t right for my portfolio?

What’s behind Monday’s fall?

Markets reacted to news from China on Monday morning.

Multiple Chinese cities are adopting fresh restrictions, from business suspensions to lockdowns, in an effort to slow the spread of Covid-19 infections.

The commercial hub of Shanghai is preparing for more mass testing after authorities detected the BA.5 Omicron subvariant.

Beijing has said that curbs must be as targeted as possible in an effort to minimise damage to the economy.

The highly-transmissible BA.5 variant has been shown to be able to escape vaccine-triggered antibody reactions, more so than other variants.

This hit Anglo American hard as a producer of metals and thermal coal. China is a huge metals importer and the world’s largest coal consumer. In 2020, the nation accounted for 56% of global coal consumption.

Anglo American is also world’s largest producer of platinum, as well as being a major producer of diamonds, copper, nickel and iron ore. Anglo American’s production of platinum accounts for around 40% of world output.

Why I’d buy Anglo American?

Anglo American stock is actually down 30% over the past month. That’s a considerable fall. Concerns over negative economic forecasts have pulled commodity prices downwards. This resulted in the Anglo American share price falling.

In fact, it’s currently trading near its year-low. For me, now represents a good time to buy. There are several key reasons to buy Anglo American.

For one, it has an attractive 7.6% dividend yield, which is considerably more than the FTSE 100 average.

It’s also trading with a price-to-earnings (P/E) ratio of just 4.7. That reflects the firm’s stellar performance in 2021, but also the falling share price.

The mining stock recorded $17bn in pre-tax profit last year. This performance had been sustained in 2022 as commodity prices soared in the early months of the year.

I also believe that, despite the current weakness in commodity prices, we’re entering a period of scarcity. This period of scarcity will be defined by more competition for resources and higher commodity prices for the long run.

However, mining stocks operate in what is traditionally a cyclical industry, hence the lower P/E ratios. Mining companies will typically do well when economies are running hot, but poorly when economies contract. As such, the current negative economic forecasts around the world are certainly not good news for Anglo American. But I believe the downturn is already being factored in to the share price.

Despite the cyclical nature of the industry, I’m positive on mining stocks and Anglo American. As a result, I’d buy it at its current price.

I would never buy a stock that I did not intend to hold for a minimum of five years, and ideally several decades.

Over such a lengthy timespan, today’s troubles will be forgotten (as most stock market dips soon are). With luck, these stocks should still be paying me generous dividends.

I’d load up my Stocks and Shares ISA today

FTSE 100 firms Anglo American (LSE: AAL) and Taylor Wimpey (LSE: TW) both yield around 7.35%, and are available at dirt-cheap valuations.

High dividends like these can ring alarm bells, as they may indicate underlying problems at the company. I don’t think this applies with these two. Their revenues look solid to me.

Earlier this year, Anglo American announced a record $2.1bn final dividend. This boosted shareholder returns to an impressive $6.2bn for 2021, as higher commodity prices delivered record profits.

The forecast yield for this year is 7.5%. This looks sustainable given that it is covered 2.2 times by anticipated earnings.

The Anglo American share price is up 15% over 12 months, helped by strong rough diamond sales at its De Beers operation, particularly in the US. As China reopens, this should boost demand for iron ore and coal, too.

The obvious threat is that the world falls into recession, as central bankers tighten monetary policy to curb inflation. That would hit commodity demand and prices. However, today’s low valuation of just 5.5 times earnings suggests I would not be overpaying if I popped Anglo American inside my Stocks and Shares ISA today.

I think housebuilder Taylor Wimpey would fit snugly beside it. The obvious risk with buying stocks in this sector is that rising interest rates will bring the era of rampant UK house price growth to a sudden end.

House price growth will almost certainly slow as mortgage rates rise (and a good thing too), but I do not anticipate a crash.

FTSE 100 income stocks tempt me

Most existing homeowners are protected by fixed-rate deals, at least for a year or two. Buyers still face intense competition, due to housing shortages.

In April, Taylor Wimpey delivered an optimistic update, announcing that it was trading in line with full-year expectations. Sales were “strong” and cancellation rates “flat”. Its order book now totals almost £3bn.

Another risk is that the UK slumps into stagflation, and the group’s labour and material costs rise faster than house prices. Management is working hard to keep costs down, and remains focused on delivering “enhanced shareholder returns”.

The Taylor Wimpey share price has delivered little in the way of growth for a decade, so the attraction here is the dividend. The forecast payout is now 7.8%, comfortably covered 2.1 times by earnings.

Today’s low valuation of 6.5 times earnings completes the argument for me. I would buy this inside my Stocks and Shares ISA, too.

The cryptocurrency has fallen an incredible 56.45% in 2022 to $20,787, and is down 45.43% over 12 months.

Bitcoin is a very different beast to the UK’s index of blue-chip stocks. It is a virtual currency with as yet unproven real world uses, and is intensely volatile.

By contrast, the FTSE 100 is packed with stocks of real-world companies delivering real-world profits and dividends. Both may have a role to play in a diversified portfolio, but I’d only buy Bitcoin with money I was prepared to lose. Right now, I don’t want to lose much at all.

I’d buy FTSE shares today

As inflation rockets and interest rates follow, investors are viewing the FTSE 100 with fresh eyes.

Instead of chasing high-risk, high-reward assets, such as Bitcoin and US tech stocks like Tesla, they are now seeking solidity.

The FTSE 100 offers plenty of that. It is packed with established banks, insurers, housebuilders, pharmaceutical firms, utilities, and energy and commodity giants.

These companies have millions of loyal customers and are generating steady revenues today. Some have benefited from recent turbulence, with BP and Shell doing well out of the rising oil price.

Commodity companies like Anglo American and Rio Tinto are also benefiting from rocketing raw materials prices.

Rising interest rates may also help banks like Barclays and Lloyds Banking Group. They can now widen their net interest margins, the difference between what they charge borrowers and pay savers. This should help offset the inevitable increase in loan impairments.

Healthcare firms like AstraZeneca and GlaxoSmithKline offer me recession proofing, as people are more likely to fall ill in hard times.

All of these companies pay generous dividends, which protect my savings against the ravages of inflation. While Bitcoin may one day transform the world, the risks are high and the rewards are distant. Cryptocurrencies do not pay any income, yet FTSE 100 dividend shares give me cash rewards today, in the shape of regular shareholder payouts.

Of course, those dividends are not guaranteed. If a company’s profits fall, then its dividend can come under pressure. Dozens of firms on the FTSE 100 scrapped or suspended their payouts during the pandemic. Most quickly restored them.

Bitcoin is too volatile for me now

So far this year, FTSE 100 company earnings have been relatively resilient. That could change, especially if we do slump into stagflation and recession.

Companies listed on the FTSE 100 generate three-quarters of their revenues overseas, spreading risk. Plus that money is worth more when transferred back into sterling, which is weak right now.

Some may see the Bitcoin slump as a buying opportunity. Personally I feel it is the wrong asset class at the wrong time. I think the real opportunity lies in FTSE 100 shares.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Begbies Traynor Group 

What it does: Begbies Traynor provides financial services for companies in distress. The firm is a specialist in corporate insolvency. 

By Royston Wild. The outlook for the UK economy is getting gloomier as inflation accelerates. National output shrank in March, latest data shows, and recessionary risks are rising. It means that counter-cyclical share Begbies Traynor Group (LSE: BEG) could be a top stock for me to buy this June. 

A mix of economic deterioration and the withdrawal of government furlough support is driving corporate insolvencies through the roof. The cash crunch facing British business looks set to intensify, too, as lending conditions get tougher.  

A study from the Federation of Small Businesses shows that banks are “pulling up the drawbridge” to firms seeking capital. Indeed, just 19% of companies surveyed described the availability of credit as “good” in quarter one. This was the lowest figure since 2016. 

In this climate I think demand for Begbies Traynor’s financial services could soar. City analysts think the stock’s earnings will rise 10% in the 12 months to April 2023. I believe this estimate could be revised upwards as the fiscal year progresses. 

Royston Wild does not own shares in Begbies Traynor Group. 

XP Power

What it does: XP Power is a designer and manufacturer of power converters for the global electronics industry.

By Zaven Boyrazian. With Covid-19 creating plenty of disruptions for manufacturing businesses like XP Power (LSE:XPP), it’s not surprising to see the stock suffer by nearly 40% over the last 12 months. However, these issues are ultimately short term. Meanwhile, demand for the group’s products continues to climb, especially from semiconductor manufacturing companies.

Looking at the latest quarterly results, revenue grew by a meagre 8%, courtesy of the aforementioned disruptions. But the order book stands at a record £260m. And with a new manufacturing facility now under construction, the firm’s order capacity is set to expand considerably over the next few years.

In my opinion, this places XP Power in a favourable position to secure long-term growth. And that’s why, alongside the accolade of being my preferred stock for June, the recent tumble in share price looks like a great buying opportunity for my portfolio today.

Zaven Boyrazian does not own shares in XP Power.

Aviva

What it does: Aviva is a UK company offering a range of insurance and wealth management services

By Alan Oscroft: Aviva (LSE:AV) has been restructuring itself for several years, disposing of non-core businesses and cutting costs. As a result of that, it has had the cash to return a total of £4.75bn to shareholders, directly and via share buyback. The company now plans to pay progressive dividends yielding better than 7% this year and next.

Aviva is not out of the woods yet, after recording an earnings fall in 2021. The financial sector is also facing an uncertain outlook in today’s economic climate. But Q1 figures in May showed solid progress.

On balance, I think Aviva has all but turned the corner. But I don’t think the share price has caught up yet. Now Aviva has all but completed its capital return, investors can focus on future of the restructured company.

I’m hoping June could be the start of a renewed bull run. I’m holding, and might even buy more.

Alan Oscroft owns shares in Aviva.

Tritax Big Box REIT

What it does: Tritax Big Box REIT is a real estate investment trust that owns a portfolio of logistics warehouses.

By Edward Sheldon, CFA. Tritax Big Box REIT (LSE: BBOX) shares pulled back in late April (after e-commerce giant Amazon announced that it has a surplus of warehouse space) and I believe this has created a buying opportunity.

One reason I’m bullish here is that in the company’s recent first-quarter results, management advised that demand for new logistics space remains “very strong” and that the group is well-placed to capitalise on the high level of demand through its development pipeline. It added that it is handling inflation through active management of open market rent reviews, along with inflation-linked leases.

Another reason is that since the share price has fallen, eight company insiders, including the Chairman, have stepped up to buy stock. This indicates that those within the company expect the share price to rebound.

Now, BBOX does have a relatively high valuation. This adds some risk. If future results are disappointing, the stock could underperform.

Overall, however, I believe the long-term risk/reward proposition here is attractive enough to name the stock as my favourite for June.

Edward Sheldon owns shares in Tritax Big Box REIT and Amazon

Games Workshop

What it does: Games Workshop designs and manufactures miniatures and games. It sells these through various retail channels.

By Stephen Wright. Games Workshop (LSE: GAW) is a stock that I’d very much like to own in my portfolio. The company has a loyal and committed customer base, with good intellectual property rights protecting its business. It also has a balance sheet that instils confidence in me, having more cash than debt.

The company is in an interesting place at the moment. I think that high inflation and rising interest rates are likely to put pressure on businesses in this sector. But Games Workshop’s unique product should, in my view, see them through.

At the stock level, I’ll be looking to exploit any weakness in June to start building out a position. I think it’s important to be disciplined about overpaying, but I think there could be an opportunity here to acquire a great business at a reasonable price.

Stephen Wright does not own shares in Games Workshop

Abrdn

What it does: Abrdn is a global investment management company, managing a wide range of assets for its clients. 

By Michelle Freeman. It may seem counter-intuitive to pick Abrdn (LSE:ABDN) as my top stock for June. After all, its core business model is its fee-based investment offerings, opposite to the Motley Fool line of thinking. 

But you see, it’s not difficult to make money in a long bull market. However, a good strategy is priceless when it comes to navigating choppier investment waters. That’s why I think the recent run of doom and gloom news on investment markets will see a lot of retail investors willing to pay a little more for investment advice. 

With the share price remaining down over 25% year-to-date, I see plenty of long-term upside potential. That’s backed up by a majority of analysts holding buy targets above today’s price. 

And when you throw in that very tasty +7% dividend yield, it makes it a whole lot easier to stay the course through the ongoing market volatility.

Michelle Freeman does not own shares in Abrdn.

Associated British Foods 

What it does: ABF is the owner of retailer Primark and four food production businesses in grocery, sugar, ingredients and agriculture 

By G A Chester. Associated British Foods (LSE: ABF) is out of favour with the market. Indeed, you have to go back almost a decade to find the share price as low as its current level. 

Primark suffered during the pandemic, but the group remained profitable thanks to its food businesses enjoying strong demand. Primark has since recovered well, and food sales have continued to grow. 

However, like a lot of companies, ABF is now seeing significant inflationary pressures in raw materials, supply chains and energy. These costs will negatively impact the group’s profit margins. Notwithstanding the headwinds, management’s outlook for the year is for “significant progress in adjusted operating profit and adjusted earnings per share.” 

There’s a risk management’s expectations could prove over-optimistic, because the economic backdrop is so uncertain. Nevertheless, with the share price and valuation at multi-year lows, I think I’m looking at a rare opportunity to buy into a high-quality enterprise. 

G A Chester does not own shares in Associated British Foods 

Games Workshop

What it does: Games Workshop designs, manufactures, and sells fantasy miniatures and related products

By Paul Summers. Rather than move into cheaper but inferior value stocks at a time when investor interest in them might be peaking, I think the current market volatility offers me a wonderful opportunity to buy some of the UK’s best growth stocks at knock-down prices. One example is Games Workshop (LSE: GAW). 

As I type, shares are down over 30% year-to-date and almost 45% off their 52-week high. This brings the price-to-earnings ratio down to 18 – mightily attractive considering the high margins and massive returns on capital Games usually posts.

Sure, spending on hobbies will likely be reduced as the cost of living gallops higher. However, I reckon the sheer popularity of its products and loyalty of its customers means business should recover strongly once the clouds have passed. 

So long as I’m prepared for hold for more than a few months, building a position in this stock in June could prove lucrative.

Paul Summers does not own shares in Games Workshop

Associated British Foods

What it does: Associated British Foods is a highly diversified business. It is the owner of a number of leading brands including: Primark, Silver Spoon and Kingsmill. It also produces a number of food ingredients including sugar beet and flour.

By Andrew Mackie. Associated British Foods (LSE:ABF)’s share price is now trading at levels not seen since the stock market crash of March 2020. Here’s why it’s my top stock for June.

However, to my mind, the business is in a lot stronger position than during Covid. Yes, Primark has been forced to raise prices on a number of autumn items due to rising input costs. But all its stores are trading and revenue growth remains strong. Its no-frills brand will likely resonate well amongst increasingly cost-conscious consumers, particularly in the run up to the holiday season.

But ABF is a lot more than just Primark. The business continues to invest heavily in its grocery brands. Twinings, for example, recently enhanced its offering in the lucrative wellbeing teas market.

I am also excited about its agriculture division which produces animal feeds for pig, poultry and dairy. As food security becomes an increasingly important consideration, yield sustainability and environmentally-friendly practices will favour innovative businesses such as ABF.

Andrew Mackie owns shares in Associated British Foods.

JD Sports Fashion

What it does: JD Sports Fashion is a retail chain specialising in sports, fashion and outdoors brands, with a large digital commerce footprint.

By Christopher Ruane. The retailer JD Sports Fashion (LSE: JD) is known for low prices — but lately that has been true for the company’s shares as well as its shoes.

Over the past 12 months the JD Sports share price has tumbled 35%. But I think that fall is overdone and see a buying opportunity for my portfolio. The company expects to report its annual results in June. I reckon that could lead investors to reconsider the share price.

JD has said that headline profits before tax and exceptional items for last year are expected to come in at £940m. It thinks that 2023 will be at least as good, although a worldwide shortage of certain types of footwear is one risk to revenues and profits. With a market capitalisation of £6.2bn, I think the company looks cheap given its strong performance and attractive business outlook, making it my top stock for June.

Christopher Ruane owns shares in JD Sports.

Anglo American

What it does: Anglo American is a mining firm operating across the globe. It mines diamonds and platinum group metals (PGMs), together with copper, iron ore, and nickel.

By Andrew Woods. Anglo American (LSE:AAL) posted bumper pre-tax profits in 2021 of $17.6bn, up from $5.4bn the previous year. The company has recently been benefiting from historically high metal prices. These higher prices have been largely caused by the reopening of economies after the pandemic. Furthermore, the situation in Ukraine has heightened supply concerns and the overall trend of rising metal prices could be here to stay for a while yet.

The firm also recently signed a memorandum of understanding with EDF Renewables. This will develop solutions to make Anglo American’s South Africa operations run on 100% renewable energy. This is part of an effort by the business to make its mining operations more environmentally friendly.

While iron ore production declined for the first three months of 2022, the diversity of Anglo American’s business may continue to allow it to reap the benefits of surging demand for base metals, not to mention rising revenue from growing diamond sales in the US. 

Andrew Woods does not own shares in Anglo American

Computacenter

What it does: Computacenter supplies IT hardware and services to large corporate and public sector organisations.

By Roland Head. FTSE 250 group Computacenter (LSE: CCC) has a long history of steady growth. Sales have doubled to £6.7bn since 2012, while Computacenter’s annual profit has tripled to £185m over the same period.

Demand surged through the pandemic due to work-from-home and ecommerce demand. Although growth has eased in 2022, Computacenter management still expect to report “a year of further progress”. This tells me that another increase in annual profits is expected.

The main risk I can see is that an economic slowdown in 2022/23 could hit demand and cause Computacenter to miss a year or two of growth. However, I think the company’s share price already reflects a cautious view.

Computacenter is highly profitable and ended last year with net cash of £95m. The stock’s forecast price/earnings ratio of 15 times is at the lower end of its historical range. I think the shares look decent value at this level.

Roland Head does not own shares in Computacenter.

Burberry

What it does: Burberry is a British luxury fashion brand that design and distributes ready-to-wear items. These include trench coats, leather goods, footwear, fashion accessories, eyewear, fragrances, and cosmetics.

By John Choong. Having seen a 15% decline this year, the Burberry (LSE:BRBY) share price could be on the verge of a rebound this summer. As a luxury brand, many of Burberry’s goods hedge against inflation. This was evident in its latest earnings results, as its profitability hit an eight-year high. The company makes the bulk of its revenue from China, and it’s been capitalising on the uptake in luxury consumer spending within the region. In fact, the British firm opened a flagship store in Shanghai recently.

Although I expect the next trading update to post bitter numbers as a result of the recent lockdown in Shanghai, I remain optimistic for the FTSE 100 firm’s long-term prospects. I believe that sales figures will rebound along with its share price once restrictions come to an end, and that a sour trading update for Q1 could present a buying opportunity for the stock in June.

John Choong does not own shares in Burberry.