Harshil Patel: Fresnillo 

Gold and silver prices have rocketed this year and could be set to march higher. Covid-19 related lockdowns, weakened confidence, and macro-economic uncertainty sent investors to safe-havens like gold and silver.  

Rather than buying gold and silver, I’d buy shares in FTSE 100 miner Fresnillo (LSE:FRES) instead. As the world’s largest producer of silver and Mexico’s largest gold producer, Fresnillo holds a dominant position in this space.  

With high-quality assets and a healthy balance sheet, I’d say this highly rated miner is well placed to benefit from further rises in gold and silver prices. 

Harshil Patel does not own shares in Fresnillo.

Rachael FitzGerald-Finch: Anpario

Bad times make good opportunities for investors to keep supporting strong businesses. One such business in my view is Anpario (LSE:ANP), an animal feeds additives producer.

Over the last 10 years, the share price has steadily grown over 350%, reflecting the firm’s strong underlying fundamentals. Notably, it hasn’t been too affected by the coronavirus pandemic either.

Currently trading on a P/E of 22, it maybe more expensive than similar firms but in my view, this reflects the quality of the stock.

Currently boasting a market-to-book ratio of 2.6, and a 2% dividend yield, I believe this is a top stock for October.     

Rachael FitzGerald-Finch has no shares in Anpario.

Manika Premsingh: Anglo American

FTSE 100 mining giant Anglo American (LSE: AAL) is due for a trading update in October. This is the first such in the post-lockdown period. So far, positive news looks likely. AAL’s diamond sales have improved. It also expected its platinum group metals, copper and iron ore segments to be better placed as global economic recovery ensued, in its last financial update. Deutsche Bank has recently lifted its share price target on the stock too. However, economic outcomes are still uncertain, especially since the pandemic is still somewhat out of control. I think it’s a good idea to keep an eye out for AAL’s next update and take an investing call on it accordingly.

Manika Premsingh has no position in Anglo American.

Andy Ross: Tesco

Shares in the grocer Tesco (LSE: TSCO) could do well in a volatile market which we might well see in October. The end of September has seen markets gyrate in response to the latest fears over Covid-19, this could well be a theme during this month as well.

When the market was struggling back in March defensive businesses like Tesco were among the better performers. The shares still seem cheap, pay a dividend and demand for food won’t go away. There’s also a new CEO. 

I expect this top stock to keep doing well in October for these reasons.

Andy Ross does not own shares in Tesco.

Anna Sokolidou: Unilever

Unilever (LSE:ULVR) shares have almost recovered from the spring market crash. The company sells necessities – food and personal care items.

Although Unilever is one of the industry’s leaders, it’s not completely immune to macroeconomic challenges. But the good thing is that Unilever operates in many countries. So, its risks are moderate because they are spread between different regions.

The company’s investment grade credit rating is a big plus. too. Unilever stock is trading at a price-to-earnings ratio of just above 20.

Anna Sokolidou does not own Unilever shares.

Rupert Hargreaves: Pets At Home

Pets At Home (LSE: PETS) has seen the demand for its services surge this year. In its latest trading update, the company reported double-digit like-for-like sales growth in the eight weeks to 10 September.

It looks as if this trend is here to stay. Demand for pets has jumped in 2020. As the largest pet-focused retailer in the country, Pets will be the first port of call for many consumers who’re looking for products for their furry friends.

Indeed, Pets is so optimistic about the future, it’s looking to invest £48m in a new giant distribution centre. Therefore, now may be a good time to buy a share of this growing business at an attractive price.

Rupert Hargreaves does not own shares in Pets At Home.

Roland Head: Ferrexpo

Iron ore pellet producer Ferrexpo (LSE: FXPO) currently trades on just 4.5 times 2021 forecast earnings. The stock also offers a forecast dividend yield of 7.3% for next year.

As far as I can see this low valuation has nothing to do with the business itself, which has some of the lowest costs in the industry and good economies of scale.

Although there’s some risk of a slowdown in demand next year, I think Ferrexpo’s valuation is being held back by allegations relating to its Ukrainian controlling shareholder. In my view, this risk could be worth taking. I think Ferrexpo shares are worth more.

Roland Head does not own shares in Ferrexpo.

Paul Summers: Begbies Traynor

Rishi Sunak’s new Job Support Scheme might help ease the pain but I suspect a lot of UK businesses could still fold over the next few months. This is why, purely from an investment perspective, I think insolvency firm Begbies Traynor (LSE: BEG) should be a top stock for October. 

A valuation of just under 15 times forecast earnings looks attractive when you consider the amount of work that may land on the small-cap’s doorstep. Positive half-year numbers in December could be the catalyst for the share price to move higher. 

Begbies also continues to pay dividends. At the time of writing, a 3p per share payout in FY21 gives a yield of 3.5%.

Paul Summers has no position in Begbies Traynor.

G A Chester: Capital Gearing Trust 

I named Capital Gearing Trust (LSE: CGT) my top buy for 2020. I felt its long history of steady, low-downside returns, made it a good bet for whatever the year would bring. It’s performed well so far, and remains my pick of choice as we head into the final quarter. 

Market volatility is likely to continue for the foreseeable future, what with Covid-19, the US election, looming Brexit, and the uncertain outlook for the global economy. Capital Gearing’s holdings of cash, bonds and gold alongside its current 42% exposure to equities make it a good pick for an unpredictable world, in my view. 

G A Chester has no position in Capital Gearing Trust.

Stuart Blair: Aviva

I think Aviva (LSE: AV) is one of the best stocks to buy in October. Last month, the new CEO, Amanda Blanc, demonstrated a willingness to make major changes to the business. This included selling a majority shareholding of its Singapore Arm for £1.6bn, in a shrewd move that should allow the insurer to focus on Britain, Ireland and Canada.

Blanc also bought over 300,000 shares at a price of just over 300p each. This proves that Blanc is optimistic for a recovery, and with the Aviva shares trading at a 34% discount year-to-date, so am I.

Stuart Blair owns shares in Aviva.

Tom Rodgers: CMC Markets

CMC Markets (LSE:CMCX) has had an incredible 2020, and there was more good news for the FTSE 250 spreadbetting and share trading platform in September, when it announced it would beat income expectations for the 2021 full year.

Existing clients are trading more, and CMC is growing fast by attracting new users, while retention has been “particularly strong” above 80%, bosses say. I see this trend continuing as traders seek to exploit volatile markets.  At a P/E of just 7 and boasting a healthy 4.62% dividend, these shares are still super-cheap for the value on offer. 

Tom Rodgers does not own shares in CMC Markets.

Edward Sheldon: Diageo

My top British stock for October is Diageo (LSE: DGE). It’s a leading multinational alcoholic beverages company that owns a portfolio of well-known spirits brands.

Diageo shares have fallen significantly this year. That’s understandable, as Covid-19 is presenting the company with a number of challenges. I think this share price weakness has created a real opportunity for long-term investors, however. I remain convinced that, eventually, the stock will bounce back.

It’s worth pointing out that in September, Diageo’s CFO spent around $250,000 on company stock. This is a good sign – it suggests that the insider sees the stock as undervalued right now. This insider purchase reinforces my view that it’s a great time to be building a position in Diageo.

Edward Sheldon owns shares in Diageo.

Royston Wild: Unilever

October could prove to be another tough month for investor confidence. With waves of new Covid-19 infections hitting all parts of the globe, the US Presidential election heating up, and the Brexit process entering a crucial stage now could be a good time to buy some good old-fashioned safe-haven stocks.

On the top of my list would be Unilever. This FTSE 100 share has exceptional defensive qualities thanks to its broad geographical footprint, its wide range of products, and the exceptional brand power of these goods. This is why its share price has recovered strongly in recent months and is up 10% since the start of 2020 despite the troubling economic outlook.

One final thing: Unilever is set to release third-quarter financials on October 22. The consumer goods colossus smashed broker forecasts with its half-year release in July. Another stunning release later this month could give the share price a further dose of rocket fuel.

Royston Wild owns shares in Unilever.

Kirsteen Mackay: AstraZeneca 

Pharmaceuticals giant AstraZeneca (LSE:AZN) is a strong company with a portfolio of credible medicines. Its high price-to-earnings ratio may put you off its share price as it looks expensive, but I think long term this is a good company that will stick around.

It offers a 2.4% dividend yield and earnings per share are 79p. With rumours of another lockdown ramping up and Covid-19 panic rising, I think AstraZeneca stock will continue to climb in October as it continues to forge ahead in the development of a vaccine with Oxford University.  

Kirsteen does not own shares in AstraZeneca.

A consistent growth share

With the share price just below 419p, the market capitalisation stands close to £90m. But unlike some small-cap stocks, Anpario has a consistent record of trading. Shareholders have shared some of the company’s success through the impressive escalation of the dividend over the past few years. The compound annual growth rate of the dividend is running just above 12%.

The results cover the six months to 30 June. Revenue increased by 13% compared to the equivalent period in the prior year, and adjusted diluted earnings per share shot up by 34%. The directors expressed their satisfaction and confidence in the outlook by pushing up the interim dividend by 10%. Chairman Peter Lawrence said in the report the period was “extremely challenging” because of Covid-19, but the directors are “delighted” with the strong sales and profit performance.

Looking ahead, he reckons Anpario will continue the online and direct marketing tactics that produced the strong performance in the period. The firm also plans to build on new business gained from those competitors unable to supply customers during lockdown. He’s confident about the ongoing “profitable development” of the business.

The coronavirus has certainly shaken things up in many sectors and I reckon Anpario has proved to be one of the winners. The crisis caused the suspension of travel and industry trade exhibitions scheduled for 2020 and that saved costs for the company. Lawrence reckons travel activities will ramp up again to pursue business development initiatives. But he thinks “some valuable lessons have been learnt” about how technology can make operations more efficient.

Global expansion on the agenda

Meanwhile, Anpario has an international reach with its sales. Last year, around 41% of profit before tax came from sales in Asia, 32% from Europe, 15% from the Americas and 12% from the Middle East and Africa. Lawrence points out that the company’s strong balance sheet provides the resources to expand globally. One angle of attack is that the directors are hunting for complementary acquisitions “which may arise in these uncertain times.”

And I agree wholeheartedly with the tactic of buying assets when they are distressed during difficult periods. Downturns are among the best times for most businesses to go shopping for acquisitions, rather than paying top dollar during boom times.

Financially, the company is in a good position with net cash on the balance sheet of around £13m. And with the share price at 419p, the forward-looking earnings multiple for 2021 sits just below 22, dropping to around 19 when you adjust for the cash pile. Meanwhile, the anticipated dividend yield runs close to 2.1%. The valuation matches the quality of the enterprise, to me. And I’d buy and hold this growth share in a diversified portfolio for at least 10 years.

Speculation-driven volatility

Just look at the share price action. The stock was around 1p in June 2017, more than 8p by September that year, flirting with 1p again in June, and around 2.28p today. If you’d bought the shares somewhere close to 8p you’d be sitting on a nasty loss. If you’d bought near a penny, you’d have doubled your money. If you’d bought at a penny and sold at 8p you’d be laughing. But to do that would have required a trader mindset rather than the long-term approach of the average investor.

I reckon such movements are driven in the first place by company news flow, but exaggerated enormously by investor speculation. Meanwhile, a longer holding period leaves investors exposed to the firm’s potential upside and to its potential risks, which are many. My Foolish colleague Rupert Hargreaves recently punched out an article describing how UKOG is finding it difficult to get oil out of the ground and how the firm has been diluting its investors by raising funds to keep trading. Maybe oil will flow in commercial quantities in the end and cash will find its way into UKOG’s coffers. But will it come in time for those owning the shares now to benefit? That’s a question impossible to answer.

Well-balanced, profitable growth

So, I’d forget about UKOG altogether and go for a profitable, growing company such as Anpario (LSE: ANP). The firm has nothing whatever to do with oil exploration, which I see as a good thing. Instead, it earns its living as a producer and distributor of natural feed additives for animal health, hygiene and nutrition.

Trading figures in today’s half-year report look decent with constant currency exchange rate revenue coming in 5% higher than the equivalent period a year ago, while diluted earnings per share moved 14% higher. The directors seem confident in the outlook because they pushed up the interim dividend 10%. Chairman Peter Lawrence told us in the report that Anpario’s business development strategy will “progressively improve sales and distribution, while control of costs will ensure that they do not move ahead of the growth we achieve.” 

One of the things I like is the £12.6m cash pile sitting on the balance sheet, and the absence of any borrowings. On top of that, the firm’s record of cash generation from operations is excellent – steady, rising, and robustly supporting earnings. The share price has doubled since the middle of 2016, which challenges the performance of speculative outfits such as UKOG, but with far less ‘excitement’.

Looking forward, City analysts following the firm predict advances in earnings for 2018 and 2019 of around 10% each year. I reckon the balanced nature of this growth — which is likely to be backed with solid cash inflow — is well worth going for. I rate the shares as ‘attractive’. 

The two companies I’m looking at today are both defensive stocks, but one has risen by 38% over the last year, while the other has notched up a 25% gain. That’s not too shabby, given that the FTSE 100 fell by 2.5% over the same period.

Feeding the animals

AIM-listed firm Anpario (LSE: ANP) produces animal feed additives for pigs and poultry. It operates in more than 70 countries, providing products aimed at improving nutrition, health and hygiene.

Sales rose by 20% to £29.2m last year, while operating profit rose by 28% to £3.4m. The standout performer in terms of growth was the United States, which now provides 7% of sales and 10% of gross profit. Anpario’s US salesforce is being expanded to take advantage of this opportunity.

One of the biggest drivers of growth was Orego-Stim, a product which is used by poultry producers to support antibiotic-free poultry production.

Given the growing problems with antibiotic resistance in humans, I think that demand for products of this kind could increase exponentially in coming years. If Anpario can gain a big market share, this could prove to be a long-term cash cow.

Growth + cash

Chairman Peter Lawrence warned today that the business does face potential headwinds as a result of the stronger pound. Raw materials prices can also affect profits.

Despite this, I was impressed by today’s numbers. My calculations suggest that free cash flow last year was around £4m, exceeding the group’s profits. Around £1.5m was returned to shareholders as dividends, while the remaining £2.5m was held in reserve for acquisitions or expansion.

Anpario now has net cash of £13m, which is about 13% of its market cap. Excluding this cash, the firm’s valuation leaves the stock trading on a cash-adjusted 2018 forecast P/E of about 22 and a prospective yield of 1.5%. That doesn’t seem excessive to me.

Food for thought

My second stock is also involved in food production, but is one step further along the chain. Cranswick (LSE: CWK) produces fresh pork and products such as sausage, bacon and cooked meats for UK supermarkets and restaurant suppliers.

These shares have tripled over the last five years, but profits have only doubled, making the stock more expensive than it was. It’s probably fair to question whether it’s now too late to profit from this success story.

I’d hold on

Broker forecasts for 2017/18 earnings have risen by 11% over the last year, as City analysts have upgraded their profit estimates for this year. Companies where earnings estimates are regularly upgraded are said to have strong momentum. Their shares often perform better than expected.

However, there are some signs this momentum could be slowing. The firm faces headwinds from falling pig prices and broker consensus estimates were cut this month, for the first time in at least a year.

Earnings per share are expected to rise by 17% this year, but growth is then expected to drop to 5% in 2018/19. I think growth could surpass this but the current forecast P/E of 20 seems quite full to me. I’d rate the stock as a hold at current levels and will keep watching.

Just getting started 

It looks as if Anpario’s growth story is only just getting started. Even though earnings per share are expected to fall by 1% for 2017 (according to the current City consensus) earnings are expected to grow 16% over the next two years to 19.4p by 2019. 

The one downside is that due to the firm’s explosive past growth, the shares are expensive. They currently trade at a forward P/E of 29. Nevertheless, according to a trading update published today, at the end of 2017, the company had a net cash balance of £13.6m, around 12% of its current market cap. Stripping out this cash (approximately 59p per share) gives a forward P/E of 24. This might seem like a high multiple, however compared to the likes of Anpario’s US-listed peer Neogen, which trades at a forward P/E of 54, Anpario appears to be the cheaper bet. 

Going forward, the demand for the company’s products should only grow as the world’s population demands more food. As long as the business continues to reinvest in its offering, earnings should continue to expand along with the firm’s cash balance, and with this being the case, I believe Anpario’s growth is only just getting started. 

Growth and income 

Financial services company Personal Group (LSE: PGH) is another small-cap growth stock that I believe is only just getting started. This business provides employee benefits to workers, such as short-term accident and health insurance. Demand for these services has grown rapidly over the past five years and Personal’s revenue has doubled during this period.

Management expects this trend to continue. In a trading update published at the end of October, CEO Mark Scanlon commented that Personal is “better placed than ever as we enter 2018” as its core business, coupled with new initiatives should help it win contracts from new customers. Indeed, City analysts are expecting earnings per share growth of 7.4% for 2018 off the back of revenue growth of 44%. 

Like Anpario, Personal also has a robust balance sheet, with “cash and deposits of £16.5m and no debt” reported at the end of the first half of 2017. On this basis, cash currently accounts for around 11% of the firm’s current market value. 

Such a hefty cash balance backs up the company’s dividend yield of 4.9%, which is costing around £7m per annum but is easily covered by cash generated from operations. 

The one downside to Personal is, once again, the stock’s valuation. At the time of writing the shares are trading at a forward P/E of 18.2, which might put some investors off. But considering the company’s historical growth record, coupled with its future growth potential, I believe that it’s worth paying a premium to buy into Personal’s story. 

In the post

Today Escher published its results for the six months ended 30 June 2017 but the market response has been underwhelming, with the stock down 2.5% at time of writing. It could have been worse given that Escher, which provides point-of-service software for use in the postal, retail and financial industries, reported a drop in first-half revenues from $12.34m to $9.39m year-on-year.

Software licence sales fell from $3.62m to $840,000, while adjusted EBITDA fell from $3.35m to $1.36m, with a $30,000 loss before tax, against last year’s profit of $1.81m. That is despite a small drop in operating expenses from $6.39m to $5.83m. It leaves the company with the same net cash position as last year, $100,000.

Smart Riposte

Escher is a small player with a market cap of just £38m and chief executive Liam Church says that customer spending patterns make its traditional business model inherently volatile. “Our licence sales in the first half were modest as compared to those of H1 2016. Nevertheless, we were able to deliver US$1.4m in adjusted EBITDA.”

Church is banking on additional licence sales  from the company’s pipeline of opportunities to meet full-year expectations. He says the company’s recent investment in moving its Riposte platform to Android and IOS devices has been “keenly received” by customers, while recent operational highlights included the new licence sale of its mobile platform to the world’s largest – but unnamed – postal organisation. You can expect volatility with a stock like this, but so far the risks have outweighed the rewards, while the valuation looks high at 28 times earnings. 

Nice bite

Animal feed producer Anpario (LSE: ANP) is a much livelier beast with its share price up almost 12% at time of writing after it reported strong sales growth in today’s interim results to 30 June. Highlights include a 39% increase in revenue to £14.8m, a 42% rise in gross profits to £7.3m and 31% improvement in adjusted EBITDA to £2.6m. Management also unveiled a maiden interim dividend of 2p a share. The cash balance now stands at £12.6m up from £11.1m.

Anpario has been boosted by strong sales growth in Asia, the Americas and Middle East as it looks to raise its international profile with global branding and set up new subsidiaries in Thailand and Indonesia. Chairman Peter Lawrence hailed the firm’s strong balance sheet and positive cash generation, and said this gives it a sound platform for further acquisitions and investment in recruitment and infrastructure.

Growth story

He said the company’s first interim dividend reflected its strong growth prospects as it looks to drive sales by building stronger and closer relationships with customers. The AIM-listed group has a market cap of just £86m but share price growth has been strong, rising 50% in the past year to today’s 370p. It is still risky but trading at 19.88 times earnings and with dividend prospects, it may merit further investigation.

Including one-off items, which in this case included a £3.7m loss on the company’s defined pension scheme, total income for the period fell from £2.1m in the year-ago period to -£2.1m. Fully diluted earnings per share slumped 27.6% to 2.1p, from 2.9p in the year-ago period. 

In addition to NWF’s earnings collapse, the group also reported a near doubling of net debt from £10.4m to £19.1m. Net debt to earnings before interest, tax, depreciation and amortisation rose from 0.8x to 1.6x. 

Top line growth 

Despite earnings coming under pressure, NWF reported a 14% rise in revenues for the period. Revenues increased from £224.6m to £255.9m as all three of NWF’s feeds, food and fuels divisions registered growth. Growth was driven by contributions from acquisitions, higher activity levels, and by increased commodity prices in its feeds and fuels units. 

However, low milk prices hit summer trading volumes in the group’s feeds division, while its fuels arm was bruised by a downturn in heating oil demand in the summer. Both of these uncontrollable factors dented margins. 

The good new is that even though margins have come under pressure NWF’s management believes the company is still on track to hit full-year figures. For the full-year, City analysts have pencilled in earnings per share of 13.4p, down 2% year-on-year and revenues of £487m, up from £466m last year. For the fiscal year ending 31 May 2018 analysts are expecting the group to return to growth with earnings per share growth of 5% projected. Based on these estimates share in NWF are currently trading at a 2018 forward P/E of 12.4. 

A warning to investors

While NWF has blamed the last half’s poor performance on factors out of its control, the figures send a worrying warning to investors. NWF is a low margin business and any unforeseen headwinds could have a significant impact on the company.

This year, NWF is on track to chalk up a pre-tax profit margin of 1.7% indicating that after tax the margin could be as low as 1.4%.  With almost no margin for error, the company’s shares look expensive, as they currently trade at a forward P/E of 13. 

On the other hand, NWF’s peer Anpario (LSE: ANP) looks more appropriately priced. 

Animal feed producer Anpario’s growth has exploded in recent years. Pre-tax profit has risen 150% since 2012 and analysts are expecting further pre-tax profit growth of 25% by 2018. Investors have placed a premium on the company’s shares thanks to this growth outlook, but based on the expected growth going forward, shares in Anpario still look attractive. 

City analysts have pencilled in earnings per share growth of around 10% per annum for the next few years. The shares currently trade at a forward P/E of 17.8 and unlike NWF, Anpario’s pre-tax margin is a healthy 17%. 

The bottom line 

NWF’s 30% profit slump shows that the company is not for the faint-hearted and the shares look expensive at current levels. As a result, peer Anpario may be a better buy.