Media

First up is WPP (LSE: WPP), whose share price has lost 20% over 12 months.

The advertising and PR group spoke of a strong Q3 performance, posting a 10.3% rise in revenue. On a like-for-like basis, revenue gained a more modest 2.7%. The company attracted $1.7bn in new business in the quarter, and $5.1bn year-to-date.

WPP has been active on the acquisition front too, most recently buying Passport, a brand design agency in California. On top of WPP’s planned £800m share buyback in 2022, it seems there’s no shortage of cash available.

Forecasts suggest a dividend yield of around 4.5% this year. Looking at a forward price-to-earnings (P/E) ratio of under 10, I find that attractive. We do face big economic risks, though. So I might wait and see how the final quarter goes.

Silver

Fresnillo (LSE: FRES) is the world’s largest silver miner. And its shares have also fallen 20% over 12 months.

Q3 silver production dropped by 5.4%, but that was expected. And over nine months, volumes increased by 2.6%.

Fresnillo also unearths gold, lead, and zinc. Production volumes of those are all down year-to-date, which might be contributing to the share price weakness.

But the company reckons it’s still on track to meet full-year guidance for its two key precious metals. It expects silver production of 50.5 to 56.5 moz of silver, and 600 to 605 koz of gold.

My biggest concern with Fresnillo as an investment right now is the stock valuation. We’re looking at a fairly lofty P/E of around 28. But forecasts have it falling to 18 in a couple of years. And I think that would be cheap compared to Fresnillo’s long-term prospects. I think I’ll wait, and hope for further future dips.

Household goods

Household goods producer Reckitt (LSE: RKT) has seen its shares gain 9% over the past 12 months.

Q3 revenue is up 14%. And reported year-to-date revenue rose 7.6%. Like-for-like (LFL) revenue is a bit better, up 8.2%.

The company has set a full-year LFL revenue target of between 6% and 8%, narrowing its earlier estimated range. Reckitt is also targeting adjusted operating margins in the mid-20s in the medium term, and says it’s on track to achieve it. For a highly competitive retail segment, I think that would be impressive.

There’s a forecast P/E of around 16-17, dropping to 15 by 2024. That’s on the upper side of the FTSE 100’s long-term average valuation. But Reckitt has a highly defensive position, and I think it’s worth it for the safety margin.

In other circumstances, I could buy Reckitt at this valuation. I just see better bargains around right now, albeit with a bit more risk.

A rising silver price

The first company to which my attention is drawn is Fresnillo (LSE:FRES). For 2021, the business – a FTSE 100 silver and gold miner – paid a dividend of $0.34 per share. At current levels, this equates to a yield of around 3.34%.

The shares are up over 16% in the last three months. At the time of writing, they’re trading at 769p.

Much of this positive price action has to do with the underlying price of silver. This has increased around 5.6% in the last three months. 

What this essentially means is that the value of Fresnillo’s product is climbing. This is good news for the company.

For the six months to 30 June, however, profits fell by 54.3%. While this may seem disappointing, it’s worth noting that much of this was down to lower productivity and a weak silver price.

The threat of further pandemic-related worker absences, though, is still something I’m aware of.

Despite this, the firm has just completed the electrification of its Juanicipio mine. This development should lead to higher productivity rates in the coming months.

Safe and secure?

The second firm I’m looking at for dividend purposes is BAE Systems (LSE:BA.). In 2021, the defence company paid a dividend of 25.1p per share. This is equivalent to a yield of 2.97%. 

The company is in the latter stages of securing a deal with the UK government to build five new warships. These would be used for surveillance in the North Sea. 

Previously, it won a similar contract to construct three ships, which was worth an estimated £3.7bn. This new deal, if completed, could be very good news for the firm.

The investment business Deutsche Bank also recently raised its price target for BAE Systems from 860p to 970p. It cited an improved cash flow outlook for this change.

The firm does face the threat posed by inflation, however, and is also working to mitigate the rising prices of raw materials, like steel.

Despite this, it’s embarking on a £1.5bn share buyback scheme. This is another way I could derive income from this investment and signals a healthy company.

Additionally, it stated that underlying operating profits climbed by 8.2% for the six months to 30 June.

Overall, both of these businesses are attractive prospects for potentially deriving an income. While they face challenges, like production issues and inflation, I think they could perform well over the long term. To that end, I’ll add them both to my portfolio soon.

Consistent profits

The Fresnillo (LSE:FRES) share price has been volatile lately, and it’s up 13% in the past month. At the time of writing, it’s trading at 730p.

In times of crisis, investors tend to flock to precious metals, because these usually hold their value. As such, I find this Mexico-based silver miner attractive.

The business has been consistently profitable over the past five years, culminating in a pre-tax profit of $611m in 2021.

Despite this, for the six months to 30 June profits fell over 50% to $141m. In addition, revenue declined by more than 14% to $1.26bn. 

While this may seem disappointing, it’s worth noting that much of this can be attributed to short-term issues. These include supply chain problems and labour shortages. Furthermore, silver prices have been falling recently, and this has decreased the value of Fresnillo’s produce.

While Bank of America lowered its price target to 810p, it stated that it believes the company’s issues may be resolved in the not-too-distant future.  

Heightened oil price

Second, the Shell (LSE:SHEL) share price has been benefiting from high oil prices. For instance, Brent crude is over $100 per barrel. In the past month, Shell shares are up nearly 11%. Currently, they’re trading at 2,330p.

For the three months to 30 June, the firm reported a profit of nearly $11.5bn, over $500m above expectations. Furthermore, refining profit margins tripled to $28 per barrel. It’s important to note, however, that this growth is not guaranteed in the future.

Although these margins are significantly greater than in 2021, I’m wondering how long this might last, given that there’s scope for the oil market to become better supplied. That oversupply might bring down the price of oil.

Despite this, the business has debt of $46.4bn, down from $48.5bn at the end of the previous quarter. 

In addition, operating cash flow stands at $57.66bn. This is attractive as a potential investor, because it means there’s potential for the firm to embark on more exploration and production activities.  

Overall, both of these companies have been solid performers over the long term. Fresnillo may provide shelter from any corrective storm that comes the market’s way. 

On the other hand, it may be prudent to gain some exposure to the exceedingly high oil price through an investment in Shell. As such, I’ll add both businesses to my portfolio soon, in order to better prepare for any turbulence ahead.

Potential safe haven?

Fresnillo (LSE:FRES) has seen its share price rise around 20% in the past six months. At the time of writing, it’s trading at 743p.

In recent results for the six months to 30 June, the Mexico-based silver miner reported that production was up 0.4% year on year. This is an indication that the firm has made its operations more consistent following the pandemic, when lockdowns impacted production.

However, over the same period, profits halved to around $141m. In addition, revenue fell by 14.2% year on year, coming in at $1.26bn.

Indeed, Bank of America reduced its price target from 920p to 810p based on the decline in both profit and revenue. 

It’s worth bearing in mind, though, that these results have been negatively affected by the fall in the underlying price of silver. It’s down 16% in the past year. 

In recent months, demand has been rising again. This is because investors are flocking to precious metals as these are considered safe-haven investments during times of economic turmoil. This may be good news for Fresnillo.

Benefiting from higher interest rates

HSBC (LSE:HSBA) is another company I’m considering adding with my spare cash. In the past three months the shares have risen 14% and currently trade at 547p.

The banking giant recently posted positive results for the three months to 30 June. During that time, it beat both revenue and cost expectations by 2% and 4%, respectively. Additionally, revenue grew by 12% year on year. 

This all comes amid rising interest rates, which means that banks can charge more for borrowing services. While this may be good for companies like HSBC, the cost-of-living crisis and higher energy bills may end up deterring potential customers from taking on more debt. 

However, for the first half of 2022, the business posted a net profit of $9.2bn, up from $8.24bn the previous year. Furthermore, basic earnings per share (EPS) rose from $0.36 to $0.42. These figures suggest that the 2023 dividend could be up to 25% above expectations, according to Deutsche Bank, which increased its price target from 751p to 760p.

Overall, both of these companies may have the capabilities to deliver growth over the long term. While there are naturally some challenges ahead, I view these as short-term in nature. To that end, I’ll use my spare £1,000 to buy shares in both Fresnillo and HSBC and hold them for a long period of time. 

A silver lining?

At the moment, Mexico-based silver miner Fresnillo (LSE:FRES) has a dividend yield of 3.57% and it paid a dividend of $0.34 last year. Currently trading at 718p, the shares are down 13% in the last year.

For the three months to 30 June, silver production increased 8.1% quarter-on-quarter. However, a yearly comparison reveals a decline of 3.6%. Despite this, CEO Octavio Alvidrez said that it was a “solid” quarter and in line with forecasts.

And the business was recently hit by a fall in the silver price from $21 to $18 per ounce. In the past week, though, it has recovered and sits back above $20.

The underlying price of silver is important for Fresnillo, because it largely dictates the value of the company’s produce. Given that silver is a good hedge against inflation, it’s quite possible that this precious metal could have higher to climb. This may only be good news for Fresnillo.

In addition, the firm has enjoyed growth in revenue, pre-tax profit, and earnings per share (EPS) between 2017 and 2021, and appears to be in a solid financial state.

Undersupplied market, growing profits?

BP (LSE:BP) shares are up 33% in the last year, but down 2% in the past month. At the time of writing, they’re trading at 403p.

Similar to Fresnillo, BP has a dividend yield of 3.94% and paid a dividend of $0.22 last year. The oil and gas mammoth enjoyed a bumper year of profits in 2021, after pre-tax losses of $24.8bn in 2020. Last year’s pre-tax profits amounted to $15.2bn.

The invasion itself heightened concerns within the oil market that supply would be affected. This was chiefly because of sanctions placed on Russian exports, leading prices to shoot up to as much as $130 per barrel.

With a global recession potentially on the horizon, however, many in the oil industry believe demand could dry up. This could lead to significant falls in the oil price and may be bad news for BP.

On the flip side, the long-term view of oil still shows that the market is undersupplied, thus potentially driving up the share price.

Overall, these are two heavyweight members of the FTSE 100. By investing the relatively small amount of £200 per month, I could gain exposure to the oil and metal markets. Over a longer period, this monthly investment will start to mount up. The consistent buying should eventually lead to the formation of large holdings, so I’ll add both companies soon.  

So let’s take a closer look at the earnings report, and why I’m considering this stock for my portfolio.

Profits dive

On Tuesday, Fresnillo announced that pre-tax profit had fallen for the first half of 2022. The Mexico-headquartered miner posted earnings dipping to $155.2m, from $445.4m for the first half of 2021.

The company attributed the fall to lower revenue, higher cost of sales and increased exploration expenses. EBITDA also dropped to $459.1m from $747m in the year-prior period. Revenue fell to $1.26bn from $1.47bn a year ago. 

Falling revenue was attributed to lower gold volumes and silver prices. However the firm recognised the positive impact of higher gold and zinc prices.

The interim dividend was cut to 3.40c a share, down from 9.90c a year prior.

However, the gold and silver miner said that it was on track to meet its 2022 production guidance, but noted some concerns for the second half. Fresnillo highlighted a fifth wave of Covid-19 in Mexico, supply chain issues and inflation as negative impactors.

Why I’m considering Fresnillo

Fresnillo said it would produce between 50.5m-56.5m ounces of silver and 600,000-650,000 ounces of gold in 2022. The company is the world’s largest producer of silver from ore and Mexico’s second-largest gold miner. 

And this interests me because we’re currently seeing negative economic forecasts around the world, from the UK and Germany, to slowing economic growth in China. Generally, amid economic downturns, investors turn to gold as a safe haven.

So, normally, I’ve looked to have more exposure to gold miners in such a situation.

However, we’re not seeing the general hallmarks of a recession right now. Employment indicators are positive in many parts of the world, including the US and UK, and interest rates are rising. At this moment investors are seeing more attractive alternatives to gold in the higher interest rate environment.

But that doesn’t necessarily mean that gold won’t become more attractive with investors later in the year. Gold is currently trading near its six-month low, around $1,769 per ounce.

The general outlook for the firm is decent too. Later this year, a major new mine, Juanicipio, comes on line. This will boost gold and silver production significantly — 43.5 koz of gold and 11.7 moz silver per year.

Silver is also more than just a pretty, shiny metal for making jewellery. It has the greatest electrical and thermal connectivity of all metals, making it a key component in solar panels, semiconductors and electric vehicles.

The stock is considerably down from its pandemic highs, and now trades around its pre-pandemic levels. But, for me, now looks like a good time to add this stock to my portfolio.

Despite production challenges and inflation, I see the gold price increasing towards the end of the year, and silver demand increasing over the decade. That’s why I think Fresnillo is a good buy for my portfolio.

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

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. 

A gold and silver gem

Fresnillo is the world’s leading silver producer and one of Mexico’s largest gold producers. It has a near 500-year history of mining precious metals in South America. Its mining concessions extend to approximately 1.7 million hectares where it operates both underground and open pit mines.

In 2021, revenue was $2.8bn, representing a 9% increase on the previous year. This was mainly down to average realised silver prices, which rose 16% during the year.

It possesses a rock-solid balance sheet. Its earnings before income tax depreciation and amortisation (EBITDA) stands at $1.2bn. With a net debt of $1.1bn that means its net-debt-to-EBITDA ratio is negative.

Silver – a versatile metal

Like its more expensive cousin gold, silver is predominantly viewed as a monetary metal. However, it also has many industrial applications too. With the greatest electrical and thermal connectivity of all metals, silver is a key component in solar panels, semiconductors and electric vehicles.

Decarbonisation of the global economy together with the ‘internet of things’, in which hundreds of billions of physical devices are connected to the internet, are two unstoppable megatrends that should ensure silver remains in high demand well into the future.

Silver also acts as an inflationary asset. In the early 1980s, when inflation was rampant, the price of silver hit $50 an ounce. More recently, during the Covid crash, silver prices rose as the general stock market tanked.

What I like about silver is that the metal looks historically undervalued relative to other commodities, including gold. That’s why I have been buying shares in Fresnillo over the last few months as I don’t know when it’s likely to bottom. But in light of the structural forces highlighted above, it’s a fair bet that Fresnillo’s share price should be higher in the long term.

Challenging environment

As one would expect of a cyclical commodities business, Fresnillo’s dividend has ebbed and flowed over the past decade. However, it has increased its dividend for the past three years. Its policy is to pay out between 33% and 50% of profit after tax each year. In 2021, the payment was $245m.

Like so many mining companies, Fresnillo has been particularly impacted by soaring energy prices, which it relies on to fuel its transport fleet.

And last year, the Mexican government introduced a law that prohibited the use of contractor labour. This hit the business particularly hard. Long term though, it’s likely to provide it with greater operational resilience.

Overall, I believe that the prospects for the company are good. Later this year, a major new mine, Juanicipio, comes on-line. This will boost gold and silver production significantly. As Fresnillo’s share price languishes at multi-year lows over recessionary fears hitting silver demand, I recently bought more shares for my Stocks and Shares ISA.

Here are two non-cyclical FTSE shares I’m thinking of buying right now.

BAE Systems

It’s no surprise that BAE Systems’ (LSE: BA) share price has rocketed in 2022. The conflict in Ukraine has underlined the tense geopolitical backdrop that has caused arms spending to spike in recent years.

Developments this week have boosted the sales picture for defence stocks like BAE too. Military alliance NATO announced plans to raise the number of its troops on high alert to 300,000 from 40,000. The group will also significantly boost the number of ‘brigade level’ battle forces in countries close to Russia’s border.

Meanwhile, British defence secretary Ben Wallace called for UK defence spending to increase to 2.5% of GDP per year. This is 20% above the current target.

Signs of a new Cold War between East and West — and fears over tensions in Asia — means demand for BAE Systems’ defence products should grow. Even as the global economy struggles countries will be reluctant to cut spending on defence needs.

I like BAE specifically because of the broad range of services it supplies. It has exposure to fast-growing and money-spinning categories like cyber security and submarines that can deliver solid long-term profits growth.

The range and the market-leading quality of its systems makes the firm a critical Western arms supplier too. Having strong relationships with UK and US armed forces — two of the top five defence spenders in the world — has obvious advantages for BAE’s bottom line.

While development problems at the company aren’t that common, fulfilling contracts is an ever-present risk that could damage future orders. Still, on balance, I think the benefits of owning BAE shares more than offset this danger. This makes the business a top buy for July.

Fresnillo

I believe Fresnillo (LSE: FRES) is another safe FTSE 100 stock this month. This is because I’m expecting worries over strong and sustained inflation to remain in place for some time yet.

This is an environment that boost prices of precious metals like the gold and silver Fresnillo produces. Demand for these safe havens could disappoint if the Federal Reserve keeps hiking rates and the US dollar strengthens. But as things stand I think the outlook for bullion values is mostly positive.

Just this week, the Bank for International Settlements (or BIS) warned that the world is reaching a “tipping point” where high inflation will become normal. On top of this, the worsening geopolitical backdrop could boost investor demand for flight-to-safety asset gold.

In such an environment, gold prices could fly supercharging profits at gold and silver mining stocks like Fresnillo.

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

Premier Foods

What it does: Premier Foods manufactures a variety of branded and supermarket own-brand packaged food products.

By Stephen Wright. My top British stock for investors to buy in July is Premier Foods (LSE:PFD). I’ve been interested in this stock for a long time, but I think it might finally have reached a stage where I’d like to buy shares for my portfolio.

If you’ve ever heard that your branded custard and your supermarket-brand custard are from the same factory, this is true. And Premier Foods is the company that owns that factory.

I think that demand for this company’s products should remain stable, even in a recession. And the stock trades at a price-to-earnings (P/E) ratio of just under 13, which I think is reasonable.

To my mind, Premier Foods had always had too much debt and that’s stopped me from buying shares. However, with management having substantially reduced debt over the past few years, I’m looking at buying shares in July.

Stephen Wright does not own shares in Premier Foods.

Grainger 

What it does: Grainger is the largest residential landlord on the London Stock Exchange with a portfolio of around 10,000 homes. 

By Royston Wild. In theory, residential landlords like Grainger (LSE: GRI) could suffer some turbulence as the economy sinks. As the employment market weakens, the chances of their tenants missing rent payments increases. 

Recent data showing Britons drastically cutting food spending indicates the extreme financial pressures people are facing today. 

Past events are not always an accurate indication of what’s to come. But encouragingly, history shows us that spending on accommodation by and large tends to remain stable during all points of the economic cycle. As a result, I think Grainger is an ideal stock for me to buy in July as the cost-of-living crisis worsens. 

In fact, this is a property stock I’d buy to own for the long haul. The UK’s shortage of available rented homes looks set to drag on, meaning Grainger should continue to enjoy strong rental income growth.

Finally, I like the steps the business is taking to rapidly expand to supercharge profits growth. For instance, in late May it spent £128m to acquire another build-to-rent development in Bristol. 

Royston Wild does not own shares in Grainger. 

Associated British Foods

What it does: ABF owns fashion retailer Primark and a range of food businesses, including Kingsmill, Twinings and sugar producer AB Sugar.

By Roland Head. Family-controlled Associated British Foods (LSE: ABF) has been through a tough period. But I think I am now seeing a rare buying opportunity for this stock.

Primark was hit hard by the pandemic because it doesn’t sell online. But the company’s value offering is chiming with consumers battling the cost-of-living crisis. Primark sales rose by 81% to £1.7bn during the 12 weeks to 28 May, compared to the same period last year.

Interestingly, Primark is now trialling a click-and-collect service. This could lead to a full online retail offer.

The main risks I can see relate to ABF’s food and agriculture businesses. With costs rising, I can imagine that profit margins could be squeezed by big buyers such as supermarkets.

However, ABF shares currently trade on around 12 times forecast earnings. I’ve rarely seen them so cheap. I think this could be a great long-term buying opportunity for my portfolio.

Roland Head does not own shares in Associated British Foods.

Reckitt

What it does: Reckitt is a consumer goods company that is focused on health, hygiene, and nutrition.

By Edward Sheldon, CFA. Given the amount of economic uncertainty we’re facing right now, I think it’s a good idea to buy more defensive dividend stocks for my portfolio. And one stock that fits the bill here is Reckitt (LSE: RKT).

Reckitt is certainly defensive in nature. Even in a recession, people are still going to buy its health products (e.g. Strepsils lozenges) if they fall ill. Meanwhile, it also has a nice dividend. At present, the prospective yield on offer is just under 3%.

Another attraction of Reckitt is that it’s currently benefiting from the infant formula shortage in the US. With a major rival recalling its products due to contamination fears, the company has been able to capture market share. This has boosted revenues on the nutrition side of the business.

Now, this stock does have an above-average valuation, which adds some risk. However, all things considered, I think it’s a smart buy for my portfolio in the current environment.

Edward Sheldon owns shares in Reckitt.

AstraZeneca

What it does: AstraZeneca is one of the largest biotech firms in the world focused on tackling cancer, respiratory, and cardiovascular diseases.

By  Zaven Boyrazian. The biotech sector is fraught with enormous development challenges and financing risks. Yet, for the groups that succeed, humongous growth can be uncovered. That certainly seems to be the case for AstraZeneca (LSE:AZN) at the moment.

Despite being a giant “blue-chip” player in the space, shares have climbed by almost 30% year-to-date. The company has been delivering a slew of positive clinical trial results for several of its ongoing projects. But most notably is its phase 3 breast cancer treatment, Enhertu, which achieved a 49% reduction in disease progression versus traditional chemotherapy.

The drug is now being recommended for European approval by the Committee for Medicinal Products for Human Use (CHMP). And, if granted by regulators, it could untap a multi-billion-dollar market opportunity from just one of its products in the pipeline.

Pairing this exciting prospect with a diverse product pipeline and plenty of resources at its disposal makes AstraZeneca a business I’m considering for my portfolio today.

Zaven Boyrazian does not own shares in AstraZeneca.

Fresnillo

What it does: Fresnillo is a miner and producer of precious metals, including gold and silver, and operates in Mexico.

By Andrew Woods. In 2021, Fresnillo (LSE:FRES) reported that profit before tax had increased by about 10.9%, while revenue grew by 11.2% over the same period. Much of this has been due to higher metal prices over the past couple of years.

While silver production remained flat last year, gold production fell by 2.4%. This decline may be offset in future by the opening of two new plants at Juanicipio and Pyrites. Both of these could bolster production in the years ahead.

In a wider sense, investors may flock to gold and silver to avoid inflationary risk. With inflation set to rise to 10% in 2022, this trend could mean that the value of Fresnillo’s produce increases over time.

There are risks, though. The company could begin to feel the pinch from higher energy costs. In addition, there is the challenge of workers’ potential wage inflation. Further regulations may also impact on operations, as could any pandemic resurgence.  

Andrew Woods does not own shares in Fresnillo.

B&M European Value Retail SA

What it does: B&M is a discount retailer selling branded products to over four million customers a week.

By Paul Summers: Its share price has been struggling lately but I reckon discount retailer B&M European Value Retail SA (LSE: BME) is worth a closer look. With inflation likely to continue climbing over the summer, the company is well placed to benefit from an extended period of belt-tightening by UK consumers.

True, recent full-year results weren’t particularly well received. Revenue was down slightly on the previous year (but still way up compared to two years ago) and profit was flat. News that the CEO Simon Arora is to depart has also made investors nervous.

Still, I think a lot of bad news is now baked in. A P/E ratio of just over 10 at the time of writing looks reasonable. A 5% forecast dividend yield is chunky and looks very unlikely to be cut based on earnings expectations.

Paul Summers does not own shares in B&M European Value Retail SA

Rolls-Royce

What it does: Rolls-Royce is a manufacturer of engines for commercial aircrafts, business aviation and military transport, as well as developing onsite power and propulsion systems.

By Andrew Mackie: The recent woes of Rolls-Royce (LSE: RR) have been well documented, but I am starting to see real value at the level the share price is trading at.

What has sparked my interest was the recent civil aerospace investor day, which has led me to believe that there is light at the end of the tunnel.

Consistent investment over many years in its core markets of wide-body aircrafts and business aviation are starting to bear fruit. The business is now going through a period of less-intense new-product introductions, meaning that it will be able to capture a greater proportion of revenues through lucrative service contracts.

Another area that has seen explosive growth is in the passenger-to-freighter conversions. Rolls-Royce is primed to capitalise on this emerging trend. As supply chains have become increasingly constrained, companies have been looking for new ways to move their goods across the globe. The Trent 700 engines have a near complete monopoly in this space.

Exactly timing a likely recovery in the share price is impossible. But I am convinced that, long term, the trend will be higher.

Andrew Mackie does not own shares in Rolls-Royce.

British American Tobacco

What it does: British American Tobacco is a United Kingdom-based, multi-category consumer goods company that provides tobacco and nicotine products.

By Kevin Godbold. It’s hard for me to ignore the tempting numbers coming from British American Tobacco (LSE: BATS). With the share price near 3,560p, the forward-looking dividend yield for 2023 is just above 6.8%.

Annual dividend payments have been rising for several years. And they are backed by a robust flow of cash into the business. Meanwhile, elevating profits and a vibrant share buyback programme look set to drive earnings higher.

BATS is winning market share for its new products aimed at reducing some of the harmful effects of smoking. And losses have been reducing for the category. But the traditional smoking products are still a cash cow for the company despite a trend of declining worldwide volumes.

The industry faces intense regulatory scrutiny at times. And that could increase the risk for investors. But I’m holding the stock and believe it could do well in July and beyond.

Kevin Godbold owns shares in British American Tobacco.

Breedon

What it does: Breedon is the UK’s largest independent construction materials firm. It produces cement, aggregates, asphalt, and other construction materials.

By John Choong. With the government recently announcing its new ‘Help to Build’ scheme, there are a number of stocks that could benefit from the initiative. One of which is AIM-listed, Breedon (LSE: BREE). A new house typically uses more than a 100 tonnes of cement and aggregates combined, on average. Therefore, new builds from the scheme should bring a tailwind to Breedon’s top line.

Breedon has multiple streams of income. The firm builds other infrastructure as well, such as roads, of which it has a sizeable contract surfacing and highway maintenance business. Additionally, the S&P Global/CIPS UK Construction PMI (a measure of how well the construction sector is doing) is still posting strong figures of growth.

So, with a P/E ratio of 13 and a forward P/E of 10, the stock definitely seems reasonably priced. Analysts have also given the stock an average price target of £1.00. As such, Breedon shareholders could potentially grow their money by 60%.

John Choong does not own shares in Breedon.

Unilever

What it does: Unilever is a fast-moving consumer goods manufacturer that owns premium brands like Dove. 

By Christopher Ruane. It has been a challenging year for consumer goods maker Unilever (LSE:ULVR). The company behind premium brands like Domestos and Lynx has been battling with rampant cost inflation. That threatens to eat into profit margins.

I think that helps explain why the Unilever share price has fallen by 13% over the past year. Investors are worried that inflation could hurt profits. In the short term, I think that is true. But I am a long-term investor, and reckon the current share price is a buying opportunity for my portfolio.

The sort of pricing power premium brands give a company can help it offset the challenge of inflation. So though Unilever’s volumes slipped 1% in the first quarter compared to the prior year, it still managed to grow sales by 7.3%. I think this resilient business model makes it an attractive buy for my portfolio at its current price.

Christopher Ruane owns shares in Unilever.