Motorpoint Group

Retailers of all kinds face extreme peril as the cost of living crisis worsens. Evidence that Britons are cutting back even on essential goods should come as a warning to all UK retail shares.

However, it’s my belief that Motorpoint Group (LSE: MOTR) could still be a top stock to buy right now. I think the used car retailer could benefit hugely from shoppers switching from new to cheaper pre-owned cars.

I also think Motorpoint could thrive if electric vehicle (EV) sales continue to explode. According to the Society of Motor Manufacturers are Traders (SMMT), sales of pre-owned battery EVs soared 120.2% year-on-year in the first quarter.

Prices of petrol and diesel continue to rocket as the Ukraine war goes on. And so cash-strapped drivers will have greater incentive to buy more cost-effective cars from the likes of Motorpoint. The RAC warned last week that petrol might soon be commonly selling for 200p a litre.

I’d use Motorpoint’s recent share price decline as a chance to pick up a bargain. I think long-term earnings here could balloon as environmental and financial concerns drive a mass shift to EVs.

SSE

The SSE (LSE: SSE) share price has risen strongly in 2022 as investors have sought out safe-haven shares. Electricity producers like this can, of course, expect demand for their services to remain strong at all points of the economic cycle.

However, SSE’s share price has slumped from record highs in recent weeks. This is due to news that the government will impose a windfall tax on energy producers to offset leaping oil prices. Renewable energy stocks like SSE are in danger of taking a big financial hit alongside fossil fuel producers.

Still, at current prices of £17.60 per share, I believe SSE could be too cheap to miss. The FTSE 100 firm trades on a forward price-to-earnings growth (PEG) ratio of just 0.9. A reading below 1 suggests a stock is undervalued.

On top of this, SSE’s prospective dividend yield sits at a very healthy 5.1%.

Investing in heavily-regulated businesses like SSE can often be problematic. And especially when people are struggling with everyday costs (as the introduction of the windfall tax illustrates). It’s possible that discussions capping dividend levels at firms like these could return soon too.

However, as things stand today, I think SSE is a great share for me to buy. I like its excellent defensive qualities which provide me as an investor with peace of mind. And I think the huge sums it is investing in renewable energy over the next decade could deliver excellent shareholder returns as action against climate change speeds up.

It might not be plain sailing over at Wincanton (LSE: WIN) as the economy cools and fuel costs soar (diesel hit a new record above 178p this week).

But I believe the opportunities for the distribution giant are good enough to overlook the issues as e-commerce grows. Latest financials showed ‘eFulfilment’ revenues up 56% in the 12 months to March. And Wincanton said that “the medium-term outlook for online eFulfilment remains strong” last month too.

The stock’s acquisition of Cygnia last autumn has boosted its ability to capitalise on the online shopping boom as well. Internet sales have been booming following the pandemic and Britain had the highest rate of e-commerce penetration worldwide last year according to Mastercard.

Today Wincanton trades on a price-to-earnings (P/E) ratio of just 9.8 times.

Growing market share

Marketing merchandise business 4Imprint Group (LSE: FOUR) faces near-term turbulence as consumer confidence in the US weakens. The business sources almost all profits from North America.

Consumer confidence in the States has sunk to 11-year lows, data this week showed. The mood threatens to get worse as inflation rises too, threatening company spending on marketing.

However, as a long-term investor I’m still excited by 4Imprint’s investment case. The stock makes mugs, umbrellas, T-shirts, pens and an assortment of other objects on which firms put their company or product name.

This is a market that’s growing rapidly due to its better cost-effectiveness versus traditional advertising. And it’s one in which 4Imprint is growing market share from a very low base. McKinsey & Company puts its share at just low-single-digit percentages.

Most recent financials showed 4Imprint’s orders in North America up 11% between January and April versus the same 2019 period. Right now this cheap UK share trades on a forward price-to-earnings growth (PEG) ratio of 0.6.

Motoring on

I think Motorpoint Group (LSE: MOTR) shares could be a wise investment as the shortage of new cars in the UK worsens.

Huge supply problems concerning components like semiconductors are hitting auto production hard. A knock-on effect is that demand for pre-owned vehicles is surging, an industry Motorpoint specialises in. The problem is getting worse amid a Covid-19 resurgence in China, meaning the prices Motorpoint and its competitors are charging continue to rise.

Latest data from the Society of Motor Manufacturers and Traders showed used car sales rose 5.1% in the first quarter of 2022. Motorpoint is growing the number of branches it operates to make the most of this opportunity and deliver long-term profits growth. In the six months to March alone the company opened three new sites.

Today Motorpoint trades on a forward PEG ratio of just 0.1. Despite the intense competition it faces I think it could be too cheap for me to miss.

A shortage of semiconductor chips and essential parts of new vehicles, coupled with the global supply chain crisis, has led to a shortage of new vehicles being manufactured. Used car sales in the UK rose 5.1% between January and March this year, compared to the same period last year.

UK shares have a competitive advantage

Motorpoint (LSE:MOTR) is the UK’s largest independent vehicle retailer. It specialises in selling used “nearly new” cars that are usually two to three years old. Motorpoint has large retail outlets strategically located throughout the country.

As I write, Motorpoint shares are trading for 243p. At this time last year, the shares were trading for 286p, which is a 15% drop over a 12-month period.

I like Motorpoint shares for three reasons. Firstly, many UK shares have seen prices dip due to a market correction in recent months. At current levels, Motorpoint shares look good value for money on a price-to-earnings ratio of 20. The industry average is closer to 30.

Next, Motorpoint possesses a competitive advantage due to its profile, reputation, and position as the largest vehicle retailer in the UK. With its extensive presence and an online arm for online sales, the business could be primed to secure sales and boost performance.

I do understand that past performance is not a guarantee of the future. However, looking at Motorpoint’s recent year-end update release last month, it said it expects to report a revenue increase of 82% for the year ended 31 March 2022 compared to 2021. It also noted its market share increased too.

Motorpoint shares could come under pressure if macroeconomic headwinds are curbed and the supply chain issue and semiconductor issue are resolved. This could mean newer cars are more readily available.

Pick #2

Vertu Motors (LSE:VTU) operates a chain of franchised motor dealerships across the country selling vehicles on behalf of well-known brands such as Audi, BMW, and Land Rover.

The company sells new and used cars. Its used car arm should be more lucrative until the current macroeconomic issues ease.

Vertu shares are currently trading as a penny stock, for 52p. At this time last year, the shares were trading for 46p, which is a 13% increase over a 12-month period. Vertu, like many other UK shares, saw its share price drop in recent months due to the stock market correction.

I think Vertu shares look cheap on a price-to-earnings ratio of just 3. In addition to this, the shares could help boost my passive income stream. Vertu shares’ dividend yield is just less than 1.5%. Of course, dividends are never guaranteed.

Looking back, I can see Vertu grew revenue and profit for three years between 2018 and 2020. 2021 levels dipped due to the pandemic. Results for the year ended 28 February 2022 were released today. Record trading resulted in an increase in revenue, profit before tax, and net cash. A dividend of 1.7p per share was also declared.

Vertu’s biggest issue could be competition in the saturated market as it continues to jostle for market share.

I’d add both of these UK shares to my holdings and believe they could provide me with lucrative returns in the longer term.

Too cheap to miss?

Car retailer Motorpoint Group (LSE: MOTR) is tipped for strong and sustained earnings growth in the medium term. A 123% improvement in full-year profits is expected in the current fiscal period to March 2022. A 20% rise is anticipated for financial 2023.

Yet despite these bubbly predictions Motorpoint still trades extremely cheaply. This share trades on a forward price-to-earnings growth (PEG) ratio of just 0.1.

I don’t think this reading reflects how robust business is, and is likely to remain, at Motorpoint. Supply chain problems in the new car market are sending demand for pre-owned vehicles through the roof. The retailer in fact said that revenues and profits would come in “significantly ahead” of expectations when it last updated the market in November.

Motoring on

Fresh data on the second-hand car market has boosted my expectations of another blockbuster update when it releases its full-year trading update in early April, too. According to Auto Trader, the average price of a pre-owned vehicle has risen 29% over the past 12 months. Price increases are accelerating as the shortage of new stock worsens.

Of course, Motorpoint could suffer if a chronic shortage of used vehicles emerges and it ends up with half-empty forecourts. But this is a risk I’d be happy to accept given the company’s massively cheap share price. A combination of strong industry fundamentals and robust market share gains makes Motorpoint a top cheap stock for me to own today.

Ready for action

Geopolitical tension is at its highest for decades as Russia’s military perches outside Ukraine. Fears of fresh conflict between the West and emerging nations Russia and China have been growing for some years, though, a phenomenon which saw global defence spending rise at its fastest pace for 11 years in 2020.

Another hefty yearly increase is expected when the Stockholm International Peace Research Institute releases 2021 numbers in April. The ratcheting up of military posturing in Eastern Europe today means arms expenditure can be expected to keep rising strongly in 2022 and beyond, too.

As a result I think companies like Chemring Group (LSE: CHG) can expect demand for their goods to continue growing strongly. In fact City analysts think that this particular UK defence share will experience earnings growth of 8% and 4% in the next two financial years (to October 2022 and 2023 respectively) alone.

A FTSE 250 firework

Chemring manufactures flares and decoys which protect planes and ships from missile attack. The company sells more than half of its tech to the US, though it is also a major supplier to British and Norwegian armed forces.

It’s important to look at the dangers facing Chemring, of course. One of the main worries I have is that its critical life- and equipment-protecting systems have to be impervious to failure. Any other outcome could have disastrous consequences for Chemring’s future orders.

Still, it’s my opinion that Chemring’s undemanding valuation reflects this ever-present danger. At 260p per share, this share trades on a forward P/E ratio of just 14 times. I’d happily buy the FTSE 250 firm for my portfolio right now.

Screen idol

Investor interest in Cineworld is dwindling rapidly as concerns over the cinema operator’s hulking great debt pile — and what this could mean if rising Covid-19 cases mean it’s forced to close its doors again — gain traction.

This is perhaps a shame as box office data shows movielovers all over the world are returning to theatres in their droves.

I still think investing in this part of the leisure sector could be a good idea. Pleasingly, Everyman Media Group (LSE: EMAN) gives me the option to do this without having to worry about a debt-heavy balance sheet. Trading here has indeed remained extremely robust.

Everyman has hiked its full-year profit expectations, thanks to forecast-beating admissions. Encouragingly, the cinema giant has said that “the appetite for cinema remains strong” for next year, based on early indications.

I also prefer Everyman over Cineworld because it offers an experience that the mainstream cinema operators don’t. Its sites allow guests to grab a drink at a bar and sit down for a bite to eat before or after the showing starts.

Its film slate is also filled with independent and niche movies and shows in addition to the ticket-shifting blockbusters offered up by Hollywood. This makes it appeal to a wider audience than Cineworld, Odeon et al.

That’s not to say buying Everyman doesn’t come without risk, of course. The business isn’t expected to move back into profit until 2023, at the earliest. And that’s assuming that further Covid-19 lockdowns can be avoided.

Fresh waves of coronavirus cases could therefore have a serious effect on shareholder morale and cause Everyman’s share price to sink again. The cinema chain currently trades at 145p per share.

Business is revving up!

The severe supply problems that’s affecting new car production doesn’t seem to be going away. According to the Society of Motor Manufacturers and Traders, new auto sales in Britain fell to their lowest for 30 years in October.

Many in the industry are now expecting the semiconductor shortages that are causing stock shortages to last into 2022 too.

This bodes extremely well for used-car retailers like Motorpoint Group (LSE: MOTR). Used-car values are going through the roof as people trade down to pre-owned vehicles, due to said shortages. This saw market revenues rocket 56.1% year-on-year between April and September, data this week showed.

The result was also helped by strong demand following last year’s Covid-19 lockdowns and encouragingly market share grabs.

But I am concerned by how a slowing UK economy could impact demand for Motorpoint’s big-ticket items in 2022. Still, this is a risk I believe is baked in at current prices of 349p.

Analysts think the retailer will enjoy an 85% increase in annual earnings in the current fiscal year (to March 2022). This means the business trades on a forward price-to-earnings growth (PEG) ratio of just 0.3.

It’s a problem that’s clouding the outlook of many car retailers, but not all. Reduced vehicle output is playing into the hands of second-hand specialist Motorpoint Group (LSE: MOTR), for one.

A shortage of available new vehicles is pushing prices of pre-owned vehicles through the roof. According to the AA, prices are rising at “unprecedented rates,” with demand for nearly-new cars — a segment which Motorpoint specialises in — increasing particularly strongly.  

AA data shows that prices of Britain’s most popular second-hand cars have leapt 57% between 2019 and today. The impact the shortage of new vehicles is having on the pre-owned market could remain to continue boosting revenues at Motorpoint for some time longer too. Mercedes-Benz chief Ola Källenius has recently said that the semiconductor shortage smacking new vehicle production could even drag into 2023.

Sales are soaring

The strength of the pre-owned market is reflected in Motorpoint’s recent stream of market updates. In early October’s latest statement, the company said sales had rocketed 57% in the six months to September.

Like retailers of new vehicles, Motorpoint has also been hit by short supplies of stock. But the business has taken steps to address this and expanded its core market of vehicles below three years old to include models that are aged up to four.

This recent strong trading helped Motorpoint’s share price jump earlier in October. But the business has since retraced and lost all of those gains. The retailer’s now 18% more expensive than it was a year ago, and I think the release of half-year financials on 25 November will push the firm’s share price higher again.

A growth share on my radar

I think the company’s current valuation leaves plenty of space for fresh gains. At a price of 342p per share, Motorpoint carries a price-to-earnings growth (PEG) ratio of just 0.2. A reading below 1 suggests a UK share could be undervalued, or so investing theory goes.

Buying Motorpoint shares isn’t without risk, of course. As well as the dangers of stock shortages, a period of significant inflationary pressure could also dent sales as broader consumer spending comes under the cosh.

It’s my opinion though, these threats are more than reflected in the company’s ultra-low PEG ratio. I don’t just like Motorpoint because of the bright outlook for used-car prices. I like its great track record in growing sales far above those of the broader market. And I’m encouraged by its plans to keep expanding (it recently sealed the deal on a new site in Milton Keynes).

City analysts think Motorpoint’s earnings will rise 86% and 45% in the years to March 2022 and 2023 respectively. I think it could be one of the most attractive growth shares out there.

Having looked at the FTSE 100 and FTSE 250 in previous articles, today I’m focusing on three stocks from the small-cap (non-AIM) space.

Treatt

Ingredients manufacturer Treatt (LSE: TRT) supports the global flavour, fragrance and consumer goods markets. That may not sound particularly racy compared to a glitzy tech share. However, the returns generated over the last year and five years (+63% and +405% respectively) speak for themselves.

On top of this, the gradual reopening of hospitality venues across the world should be a great tailwind for the company which remains a leader in its field. 

Of course, there are still potential headwinds ahead. A resurgence in Covid-19 cases and the subsequent re-introduction of certain restrictions could put the brakes on this momentum. As solid a business as this is, a P/E of 36 for the current financial year (ending 30 September) doesn’t give me much of a margin of safety either.

Personally, I’d much prefer to snap up this stock when investors are throwing the baby out with the bathwater. 

Bloomsbury

Harry Potter publisher Bloomsbury (LSE: BMY) is another small-cap star I’d buy in a general market crash.

A huge beneficiary of multiple UK lockdowns, revenue and profit soared in 2020 as many people opted to lose themselves in a novel or seven to pass the time.  And, consequently, his has boosted the share price considerably ( up 75% over the last 12 months alone).

Quite whether this momentum can be sustained is another thing. While indulging in a book will hardly break the bank, I wonder if a lot of casual readers will now focus on more active pursuits. Should this be the case, it’s surely inevitable that earnings will moderate.

It’s also worth remembering that publishing — like the movie, music and gaming industries — can be unpredictable. There’s no guarantee a particular title will sell as many copies as hoped.

Sure, BMY’s current valuation is hardly excessive, at 19 times forecast earnings. There’s a nice dividend stream too. Even so, I’d be inclined to really pile into this stock when the company’s purple patch has ended.

Motorpoint 

Car seller Motorpoint (LSE: MOTR) is a third small-cap stock I’d potentially buy if/when we experience another market crash.

Thanks to the shortage of semiconductors for new vehicles, MOTR has seen strong demand for second-hand cars as the UK emerges from lockdown. Accordingly, the company reported “record sales” in the first two months of its new financial year back in July.

Importantly, these sales were also “significantly ahead” of numbers logged in the year before Covid-19 began wreaking havoc. Add in a commitment to becoming an e-commerce-led business and I think the future looks bright for the £330m-cap.  

Then again, MOTR arguably involves the most risk of the three companies mentioned here. After all, few people think about buying a car when troubled times arrive. This is also a low-margin business in a competitive industry, making the forward P/E of 23 appear a bit expensive. 

Having climbed almost 33% in value in the last 12 months, I’m not sure that now’s the best time for me to buy. 

Society of Motor Manufacturers and Traders data shows used car sales rocketed 108.6% year-on-year in the second quarter. Sales were also up 6.6% from the second quarter of 2019. It’s perhaps no wonder then that City analysts think Motorpoint’s annual earnings will rise 85% this fiscal year (ended March).

This leaves the company trading on a forward price-to-earnings growth (PEG) ratio of just 0.3. A reading below 1 suggests a stock could be undervalued by the market. I think this makes the company a great buy despite the ongoing threat Covid-19 poses to its operations.

Another cheap UK share I’d buy

I think NCC Group (LSE: NCC) is another cheap UK share that could be too good to miss. City analysts think earnings here will rise 37% this fiscal year, resulting in a bargain-basement PEG multiple of 0.7.

Demand for the FTSE 250 firm’s cyber security services are rocketing right now as the rise of e-commerce and flexible working encourages companies to invest more in protecting their IT systems. Indeed, the business recently upgraded its forecasts for the last financial year (ended May),  thanks to a strong end to the period.

I’m expecting more encouraging news when full-year results are released on 14 September. The UK IT services share is up a whopping 62% over the past 12 months. I think this is a great stock to buy today despite the threat of larger competition from US giants Microsoft and McAfee to the FTSE 100’s Avast.

Raising the roof

News coming out of the UK housing market has been a little less encouraging over the past few weeks. Latest data from Halifax showed house price growth slow sharply in July as the tapering of the Stamp Duty holiday kicked in. The property tax is due to end completely in October and home prices could theoretically take a colossal hit.

This is a particular worry for UK shares like FTSE 250-quoted Redrow (LSE: RDW) as rising labour and raw material prices are already hitting profit margins. I think however, the threat of a heavy deterioration in the property market are baked into this housebuilder’s valuation. An expected 14% earnings rise this fiscal year (to June 2022) leaves it trading on a PEG ratio of 0.4.

But I expect the UK homes market to remain strong. This is because favourable lending conditions and huge government support for first-time buyers should remain in place. And I’d buy Redrow before full-year results come out on 15 September. The company said turnover at its regional homes business had beaten expectations last time it updated the market in June.

Zaven Boyrazian: Oxford Biomedica

Oxford Biomedica (LSE:OXB) is a biotech company that established a proprietary drug development platform called LentiVector. Using this technology, larger pharmaceutical companies like Bristol Myers Squibb and Novartis can pursue new treatments that would otherwise be  considered too expensive or technically challenging.

More recently, it has been put in charge of producing AstraZeneca’s Covid-19 vaccine. Earlier this month, the contract was expanded, roughly doubling the expected income in the process.

The contract alone could be worth £100m, potentially doubling the firm’s revenue stream. However, with a large bulk of income originating from a single source, there’s always the risk of revenue being compromised in the future. But Personally, I think the potential returns are worth the risk.

Zaven Boyrazian owns shares in Oxford Biomedica. His mother is an employee involved with clinical trials for Bristol Myers Squibb.

Rupert Hargreaves: TI Fluid Systems

TI Fluid Systems (LSE: TIFS) manufactures fluid storage, carrying, delivery and thermal management systems for light vehicles. The pandemic has impacted its sales, but the business is now well on the way to recovery.

Revenues increased 14.2% in constant currency during the first quarter of 2021. Based on this growth, management is expecting free cash flow to return to pre-covid levels this year.

Of course, this is not guaranteed. Another economic slowdown or decline in vehicle production could hurt demand for the company’s products. Still, I would buy the stock as a way to invest in the global economic recovery in the months ahead.

Rupert Hargreaves does not own shares in TI Fluid Systems.

Edward Sheldon: Smith & Nephew

My top stock for July is Smith & Nephew (LSE: SN). It’s a medical technology company that specialises in joint replacement systems.

I’m bullish on Smith & Nephew for two main reasons. The first is that the stock is a ‘reopening’ play. This year, profits should get a boost as elective medical procedures are resumed.

The second reason I like SN is that the company is well placed to benefit from the world’s ageing population. An increase in the number of over-60s globally in the years ahead should boost demand for its products.

Smith & Nephew’s valuation is higher than that of the average FTSE 100 stock. This is a risk to consider. Overall, however, the stock’s risk/reward profile is attractive, in my view.

Edward Sheldon owns shares in Smith & Nephew

Paul Summers: Motorpoint Group

Car retailer Motorpoint (LSE: MOTR) could prove a lucrative medium-term hold. Trading has accelerated in recent months as branches have reopened and UK drivers have been spending their lockdown savings. A global shortage of semi-conductors for new vehicles should support this demand for nearly new cars for a while. 

The shares already hit a record high in June, perhaps in preparation for good news. Still, a forecast P/E of 22 (at the time of writing) isn’t too steep in my opinion. Motorpoint generates consistently superb returns on the money invested in the business – something I always look for. 

Paul Summers has no position in Motorpoint Group

Kirsteen Mackay: Tesco 

I think FTSE 100 stock Tesco (LSE:TSCO) is one to watch in July. With Morrisons rejecting a takeover bid, I think it shines a spotlight on supermarket stocks. Tesco offers a 4% dividend yield, a forward price-to-earnings ratio of 12.6 and its share price is at the low end of analyst expectations.  

Tesco’s Q1 earnings show signs of growth. Group retail sales came in at £13.3m, this was up 8.1% on a 2-year-period and 1-year up 1%. Tesco does have a high level of debt. But I think it has staying power thanks to its extensive consumer data generated by its Clubcard. 

Kirsteen Mackay has no position in Tesco.

Christopher Ruane:  S4 Capital

I remain bullish about S4 Capital (LSE: SFOR), the digital advertising agency network.

Early in June, the company chairman hinted that it would reveal news of a couple of acquisitions later in July. The company is highly acquisitive and such announcements tend to attract investor attention. On top of its increased growth forecasts for the year, I think that could provide a July boost to the S4 Capital share price.

Acquisitions cost, though, and there is a risk of share dilutions to help fund the purchases.

Christopher Ruane owns shares in S4 Capital.

Royston Wild: MJ Gleeson 

The British housing market remains in rude health despite the Covid-19 crisis. And this has led to sharp price increases for UK housebuilding shares. Take MJ Gleeson (LSE: GLE) for instance. This small cap has risen an impressive 29% in value during the past 12 months. 

Yet at current prices I think MJ Gleeson’s share price remains mightily cheap. It commands a forward price-to-earnings growth (PEG) ratio of 0.8, below the bargain-basement benchmark of 1. I think the release of fresh financials on 9 July remind the market of its terrific profits outlook and prompt fresh buying interest from value seekers. Last time it updated the market in May MJ Gleeson predicted that earnings for the full year would be ahead of market expectations thanks to “strong demand for new homes.” 

Royston Wild does not own shares in MJ Gleeson.

Roland Head: Airtel Africa

I’ve chosen African mobile operator and payments group Airtel Africa (LSE: AAF) as my top stock for July. This FTSE 250 firm recently reported 25% profit growth for the year to 31 March, but still offers a 5% dividend yield.

I’m excited by the long-term growth potential of the company’s African markets, which I think should outperform the mature telecoms markets of western Europe and the US.

Although I think that investing in Africa carries some extra political and operational risks, I reckon Airtel Africa shares are cheap enough to reflect this. I’ve recently bought the stock for my portfolio.

Roland Head owns shares of Airtel Africa

Kevin Godbold: Britvic

Branded soft drinks company Britvic (LSE: BVIC) delivered a positive outlook statement in May. The firm saw “encouraging” sales in the second half to 31 March because of the easing of lockdowns. And the directors are increasing re-investment into the business to “capitalise on near-term market opportunities and drive long-term growth.”

Britvic scores well against quality indicators. And trading is improving. Although a positive investment outcome isn’t certain, I’m tempted to buy the stock for July and beyond despite the full-looking valuation. Near 943p, the forward-looking earnings multiple is just above 16 for the trading year to September 2022.

Kevin Godbold does not own shares in Britvic.

Nadia Yaqub: BT

I’ve recently turned bullish on BT (LSE: BT-A). A few weeks ago, the company announced that billionaire, Patrick Drahi through his firm, Altice took a 12% stake. This investor has a wealth of experience and I reckon it could be a turning point for BT.

But the UK firm isn’t without its problems. It has a significant amount of debt and a sizeable pension deficit. For me, the main thing is that it has a plan. BT has stated that it remains on track for a zero funding deficit by 2030. I reckon things look promising for the company.

Nadia Yaqub does not own shares in BT

G A Chester: Fresnillo 

A share-price decline of 27% makes silver and gold miner Fresnillo (LSE: FRES) the FTSE 100’s worst performer so far this year. It’s also in the red on a one-year view. Volatile precious metals prices and operational risk come with the territory, but I think the stock currently offers me a margin of safety and great value. 

Analysts are forecasting earnings growth of 80% for 2021 and a 40% dividend increase. A P/E of 14 is low by the company’s historical standards, a PEG of 0.2 is in the bargain basement, and a historically high dividend yield of 3.2% adds to the appeal for me. 

G A Chester has no position in Fresnillo.

Tom Rodgers: Rolls-Royce

News that FTSE 100-listed engine manufacturer and defence contractor Rolls-Royce (LSE:RR) is selling off its Spanish subsidiary ITP Aero for around €1.5bn gives me confidence that this British brand can climb in July. That would give it the ability to pay down its admittedly huge debt pile and brighten its future prospects. The value on offer at these prices has also attracted broker Berenberg to forecast a near 50% target increase from here, and that’s the kind of re-rate that shows institutional confidence is returning for Rolls-Royce after an horrific couple of years.    

Tom Rodgers does not currently own shares in Rolls-Royce

Jonathan Smith: Aviva

Aviva (LSE:AV) is a well-known insurance provider. I like the fact that it’s transforming focus of business and putting more focus into the core UK operations. This was seen recently with the agreement to sell off Aviva France for €3.2bn.

This also helps to boost the cash position of the business, which should support future dividend payments. The current dividend yield of 5.06% looks attractive for income investors.

The Q1 update also highlighted the highest Q1 sales in the general insurance division for a decade. With this backdrop, Aviva is my top stock for July.

Jonathan Smith does not own shares in Aviva.

Andy Ross: ITV 

Shares in broadcaster ITV (LSE: ITV) could do well in July in the run up to its 2021 interim results, due out on the 28^th July.

Back in May, the broadcaster sounded relatively upbeat. ITV Studios revenue was recovering, a key driver of growth, as was advertising revenue.  

Content such as Saturday Night Takeaway and Six Nations rugby modestly boosted viewing numbers. I’m hoping the European Football Championships continues that trend.  

Further optimism from ITV executives when the results come out could I think really help the share price. However, of course there’s a risk the update could miss expectations or have a negative outlook, which would likely send the share price down.  

Andy Ross does not own shares in ITV.

Harshil Patel: Synthomer 

My top stock for July is chemicals company Synthomer (LSE:SYNT). It supplies polymers to several markets including carpets, and coatings.  

The company is experiencing strong trading momentum across all of its business areas. It recently highlighted a positive outlook and I think strong trading is likely to continue this year.  

Although uncertainty remains in the global economy, I believe Synthomer offers a reasonable margin of safety. 

Overall, I’d say the stock is pretty cheap. It trades at a price-to-earnings ratio of 10 and offers decent earnings growth. It has plenty of cash and even offers a dividend of over 3%.   

Harshil Patel does not own shares in Synthomer.

Pay attention to CEO share buying

I’ve been a little disappointed by how few company CEOs have been buying shares during the market crash. Although regulatory restrictions mean they’re not always free to deal, I had expected a little more.

One boss who has been buying is Andrew King, chief executive of FTSE 100 packaging group Mondi (LSE: MNDI). Mr King spent £224,400 on Mondi shares last week. This suggests to me that he’s reasonably comfortable with the outlook for the business.

I’m keen too. Mondi has been a good performer in recent years, with an operating margin of about 16% and strong cash generation. In my view, the group’s bias towards consumer products should make it relatively safe in a recession.

Mondi shares currently trade on 14 times 2020 forecast earnings, falling to 12 times earnings in 2021. Although the dividend has been paused, I expect payouts to resume at the end of this year. I think this FTSE stock could be a good share to buy now.

This stock could motor ahead

One business I think could perform well as the economy gets back to normal is used car supermarket Motorpoint Group (LSE: MOTR).

This group specialises in selling cars under three-years-old with less than 25,000 miles on the clock. The group guarantees to offer the best prices on all models and was quick to adopt contactless click and collect services when coronavirus stuck.

I think this business has three key advantages over many car retailers. One is that it has a focused, low-cost business model. Buyers seem to like it — last year, nearly 30% of customers were repeat buyers.

Motorpoint is also able to sell online. Its website allows customers to reserve vehicles and arrange finance and part exchange. Add in home delivery and you don’t need to travel.  

The final attraction for me is that chief executive Mark Carpenter owns almost 10% of the shares — worth around £22m today. His interests should be well aligned with those of shareholders.

I’ve been following this company since it floated in 2016 and have been increasingly impressed. Although the near-term outlook is uncertain, I think this business should return to growth when market conditions start to normalise. I rate Motorpoint as a share to buy now.

A 7% dividend yield?

My final pick is a dividend stock with a strong record of shareholder payouts. FTSE 250 firm Ferrexpo (LSE: FXPO) is a miner based in Ukraine, producing iron ore pellets for steel mills in Europe and Asia.

Ferrexpo’s operating costs are fairly low — last year it reported an operating profit margin of 33%. Debt levels look pretty safe to me and the group has a track record of strong cash generation, supporting decent dividends.

Although I would argue that this stock carries some political risk, Ferrexpo has traded on the London Stock Exchange since 2007 and is a FTSE 250 member. I’d be comfortable holding the shares.

Indeed, with the stock trading on around six times 2020 forecast earnings and offering a forecast yield of 7%, I rate this as one of the best UK shares to buy now.