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

BAE Systems 

What it does: BAE Systems is one of the world’s leading defence companies and a major supplier to UK and US armed forces.  

By Royston Wild. Defence giant BAE Systems (LSE: BA) is the best-performing FTSE 100 share over the past six months at the time of writing. 

In fact, it’s risen around 40% in value in the year to date. And more recently its share price has remained rock-solid whilst other UK shares have toiled in this new bear market. 

I think the Footsie firm remains an ideal growth stock for me to buy today. Soaring inflation and growing recessionary risks pose a threat to more cyclical stocks. Defence stocks like BAE Systems, on the other hand, can expect trading conditions to remain robust in the near term, meaning investor selling should be kept to a minimum. 

Government defence spending is something that remains broadly resistant to wider economic conditions. War is a constant of history and countries have to be prepared to defend themselves at a moment’s notice. 

This explains why City analysts think BAE Systems’ annual earnings will rise 7% in both 2022 and 2023. This is despite the threat that supply chain problems pose to its operations. 

Royston Wild does not own shares in BAE Systems. 

Experian

What it does: Experian provides credit data to lenders to allow them to assess the creditworthiness of potential borrowers.

By Stephen Wright. I’m keeping things simple with my top UK growth share for July. 

In my view, a good growth stock is one that grows. Specifically, it grows its earnings and then uses those earnings to generate more earnings. This is exactly what Experian (LSE:EXPN) does. 

The company’s strong growth is protected by a high barrier to entry. Experian has a huge database of credit information that it bases its credit scores on, and this would be difficult for a smaller competitor to emulate.

Furthermore, most mortgages require a tri-merge report. Experian’s credit report is part of this, which makes me think that the business will continue to do well going forward.

I’m impressed by the company’s growth and I think that shares trade at a reasonable price at the moment. As such, I’m looking at adding to my investment in Experian stock in July.

Stephen Wright owns shares in Experian.

Coats

What it does: Coats is the world’s leading industrial thread manufacturer. It operates in sectors including fashion, energy and telecoms.

By Roland Head. Thread maker Coats (LSE: COA) is a business that many investors have never heard of, even though we probably all use its products.

This British business has been trading for more than 250 years and operates in 50 countries, with annual sales over $1.5bn.

Analysts expect Coats’ earnings to rise by 13% this year and by 17% in 2022. Despite this positive outlook, the shares currently trade on just 10 times forecast earnings. I reckon that’s too cheap for a business which generated a 21% return on equity last year.

I admit that Coats has disappointed the market before. Demand for some of the company’s products could also fall in a recession.

However, I think the diversity of Coats’ customers should provide protection against localised problems. I’m also impressed by the changes being put in place by CEO Rajiv Sharma. I expect strong growth over the next few years.

Roland Head owns shares in Coats.

JD Sports Fashion

What it does: JD Sports Fashion is a retailer of athletic footwear and athleisure clothing that operates globally.

By Edward Sheldon, CFA. Shares in JD Sports Fashion (LSE: JD) have taken a huge hit in 2022, and I think this has presented me with a great opportunity to buy the growth stock in July.

JD’s full-year FY2022 results, posted in June, were very encouraging to my mind. For the 52 weeks ended 29 January 2022, revenue came in at £8.56bn, up 39% year on year. Meanwhile, adjusted earnings per share (EPS) jumped to 12.8p versus 6.4p a year earlier.

Looking ahead, I’m not expecting growth to continue at this pace. However, in the long run, I expect demand for casual attire to boost revenues and profits significantly.

One risk to consider here is a pullback in consumer spending due to the cost-of-living crisis. This could hit sales. However, with the stock now trading on a forward-looking P/E ratio of under 10, I think a lot of this risk is priced into the stock already.

Edward Sheldon has no position in JD Sports.

Future

What it does: Future is a massive media conglomerate serving digital media on a variety of topics to a global audience of over 300 million people.

By  Zaven Boyrazian. Investing in a media publishing house may sound old fashioned. But it’s proven to be a lucrative move for shareholders of Future (LSE:FUTR). The company is one of the largest media groups in the world, with over 250 websites under its umbrella, including TechRadar, Country Life, and its recently acquired Who What Wear. And over the last five years, the stock is up 700%!

Revenue is primarily generated through advertising and subscriptions. But with more service platforms like GoCompare emerging in its brand portfolio, the company has begun earning considerable income through affiliate fees.

Despite delivering high-double digit growth so far this year, shares have since taken quite a tumble thanks to investor sentiment waning. There are undoubtedly risks surrounding management’s primarily acquisition-driven approach. However, with an excellent track record, I can’t help but see this slump as a buying opportunity for my investment portfolio.

Zaven Boyrazian does not own shares in Future.

Molten Ventures

What it does: Molten Ventures is a UK-based tech-focused venture capital firm with a track record of backing now-listed businesses from very early stages.

By Andrew Woods. Molten Ventures (LSE:GROW) performed well during the pandemic. For the year ended March, between 2021 and 2022, pre-tax profit grew from £267m to £325m. The value of the firm’s gross portfolio also rose from £984m to £1.53bn over the same period.

The company’s most exciting performance, however, is in its earnings-per-share (EPS) growth. Between 2018 and 2022, EPS rose from 89p per share to 200p. By my calculation, this means the firm had a compound annual EPS growth rate of 17.6%. While past performance is not necessarily indicative of future performance, this growth rate is extremely attractive.

The company’s most recent net asset value (NAV) was 937p per share in March. While this is now a few months old, it’s clear that the current share price of 460p is a significant discount. Despite this, the broader economic environment has hit tech stocks particularly hard. There may be a further slide as inflation increases and interest rates continue to rise.

Andrew Woods does not own shares in Molten Ventures.

Renalytix

What it does: Renalytix develops and sells medical devices that can diagnose risk indicators for kidney disease.

By Christopher Ruane. I own shares in Renalytix (LSE:RENX) and so far it has been an absolute dog! The shares have lost 85% of their value in the past year alone. Definitely there are still risks here, such as the substantial costs required to sell the company’s system into more healthcare providers.

But I also see a potentially fantastic opportunity if things go well. There is clinical evidence that the technology can help improve diagnostic outcomes. A presentation this month revealed its positive impact at a leading New York healthcare provider.

Kidney disease is the direct cause of over a million deaths globally each year. If Renalytix can sell its innovative, proven system into more healthcare groups, the scalability of its business model could generate higher revenues without adding costs at the same speed. In the long term I remain optimistic about the outlook, but recognise the risks involved.

Christopher Ruane owns shares in Renalytix.

Spirax-Sarco Engineering

What it does: Sprirax-Sarco Engineering is a UK-based industrial engineering company focused on thermal energy management

By Paul Summers: Cheltenham-based Sprirax-Sarco Engineering (LSE: SPX) is a high-quality company I’ve been monitoring for a while now. A world leader at what it does, the FTSE 100 member has long generated high margins and returns on the capital it invests. It’s these hallmarks that have been found to reward growth investors like me handsomely over time.

The only problem with all this is that the stock has always looked extremely expensive. Until now, that is. A 40% slide in the share price in 2022 leaves Spirax trading at almost 28 times earnings. Granted, that’s still not cheap. However, the idea of beginning to build a position here for the long term now looks far more palatable. 

There’s always a chance things could get worse before they get better if we get a recession. However, high customer loyalty should mean the pain should be temporary.

Paul Summers does not own shares in Spirax-Sarco Engineering

Carnival

What it does: Carnival operates a list of renowned cruise line brands. It sells deals and cruise packages to popular destinations.

By John Choong. Carnival (LSE:CCL) was close to hitting a five-year low in June, but positive guidance provided in its most recent trading update sent its share price rocketing by more than 10%. While this is minuscule on the wider scale of things, there are reasons to be optimistic about a potential recovery.

Despite the firm missing analysts’ estimates on earnings per share, revenue and room occupancy rate, revenue grew by almost 50%. More importantly, I was impressed with the company’s future bookings. The figure came in nearly double of Q1 2022, marking its best figure since the beginning of the pandemic. This is something to cheer for, because future bookings bring in the much-needed cash Carnival requires to return to profitability.

Provided that travel tailwinds continue to persist, Carnival could pull off a monumental recovery, pay off its debt gradually, and even achieve positive free cash flow soon. As such, grabbing shares at the current price could be a steal for years to come.

John Choong has no position in Carnival

What has caused this – and what should be my next move as an investor?

Weak results

The immediate cause for today’s fall is the company’s most recent quarterly trading statement, which it published this morning.

Revenue was just $0.8m. That is an increase from $0.6m in the same period a year ago. But it is still miniscule.

Meanwhile, the company continues to spend heavily. The profit and loss account is ugly. General and administrative expenses for the quarter almost doubled compared to the prior-year period, reaching $10.8m.

Other costs also grew, leading to a $14.7m loss for the quarter. That looks uncomfortably large for a company with a market capitalisation of just £92m.

At the end of March, the company had $32.2m in cash and cash equivalents. Since then, it has raised nearly $27m in financing. Still, at the current level of cash burn, that liquidity is barely enough to see the company through another year.

I have always felt Renalytix needs to grow sales fast to reduce its losses. But with revenues still as low as they are, the current level of cash burn looks unsustainable unless the company raises more money in the coming year. That risks diluting shareholders if it takes the form of a rights issue.

What comes next?

I continue to be optimistic about the outlook for the Renalytix’s kidney disease diagnostic platform. The company is rolling out the technology to a wider range of healthcare providers. It has also secured coverage from a growing pool of insurance providers.

Renalytix expects revenue this year to come in at $2.9m, almost double what it managed last year. That is an impressive growth rate, albeit from a low base.

Still, selling expenses continue to be a big concern for me. Even if sales double this year, and do the same again next year, the company will still be lossmaking if it keeps its current cost base.

The costs of a salesforce are necessary to grow sales fast – but they are eating into a shrinking cash pile. While the projected revenue growth for this year is good, it still will not fix Renalytix’s problem of spending far more than it earns.

My move on the Renalytix share price

Renalytix is different to most shares I own. Normally I like a company to have a proven, profitable business model before I invest. By contrast, Renalytix is spending to grow. That makes it heavily lossmaking.

I think the technology is strong and continue to see potential. With the Renalytix share price just over a tenth of what it was a year ago, I am actually considering investing a little bit more in the company as I do think its long-term sales potential is very strong. But I recognise there is a real risk that, if Renalytix cannot grow sales fast enough to cover its cost base, at some point the shares could go to zero.

S4 Capital

Last year, digital media agency holding group S4 Capital (LSE: SFOR) saw its share price soar 27%. In 2022, though, things have got off to a bad start. S4 shares have fallen 18%, meaning that over the past 12 months they only show a 5% gain.

I see that as a buying opportunity for my portfolio. S4 is a larger business than it was a year ago and I think its growth prospects are also more attractive. It plans to grow revenues and gross profits organically by 100% in just three years. On top of that, the highly acquisitive company will likely see bolt-on growth. It has been adding big clients as well as expanding its service offering.

UK growth shares I would buy now

Full-year results from S4 are due next month and they should give indications about how the business is doing. Fast growth has seen headcount balloon to over 8,000. The costs of managing such a large team could eat into profit margins. S4’s large exposure to tech clients such as Google parent Alphabet could mean revenues are hurt if the sector tightens its belt when it comes to spending.

But the rapid growth points to the fact that the S4 model clearly appeals to clients. It has a global team of top talent and is growing its lead on competitors when it comes to developing digital marketing offerings. I expect strong growth to lead the share price upwards again. I would gladly spend £150 on S4 Capital shares for my portfolio.

Renalytix

Kidney diagnostics specialist Renalytix (LSE: RENX) has had a very bumpy year, with its share price tumbling 59% in 12 months.

Some of that fall reflects risks I think could indeed be significant. The company’s revenue is small and there is no guarantee it will ever reach critical mass. The company is hoping to grow revenues by recruiting a big sales force. But that is costly and will eat into profits.

Despite the risks, I think there is a very interesting investment case at Renalytix. The market for kidney diagnosis is large and set to grow in future. Renalytix’s platform is already proving its worth to doctors, with a growing number of scientific studies to support it. The digital nature means it is scalable. So, while currently Renalytix is spending on large upfront costs like sales teams, over time hopefully the more installations Renalytix can achieve the better its profit margin will become. With a large, growing market size, a unique product, and a strategy to sell to large healthcare providers in the US, I think Renalytix could turn out to be a highly profitable business in future.

As the share price falls indicate, many investors continue to question the long-term prospects for Renalytix and how much money it will need to spend to build a profitable business at scale. But I continue to think the outlook is positive. I would happily spend £150 on Renalytix shares for my portfolio.

Is this a sign I should cut my losses – or a buying opportunity for my portfolio?

Medtech pioneer

The share in question is Renalytix (LSE: RENX). The company is not very well-known. That is partly because of its short history. It’s also because it focuses on the US medical sector, despite its London listing. Its flagship product is a kidney diagnostics platform. The company thinks it is a cost-effective way for doctors and medical care providers to diagnose certain kidney conditions.

That could potentially be a big market. Renalytix has proprietary technology and growing clinical support. It has made inroads into selling its services to medical providers. To date though, it remains in the early stages of commercialisation. In the first quarter, for example, revenue was just $0.5m. While that is better than the zero figure it recorded in the same quarter of the prior year, it is still a small amount. Even after the share price fall, Renalytix commands a market capitalisation of £286m.

Tumbling share price

The Renalytix share price was doing well until the end of July. Since then, it has steadily slid downwards. It has given up 37% since the start of this year, but the decline had already set in months before that.

After an initial flurry of excitement in the early months of Renalytix’s listing, I think increased investor focus on short-term business results has hurt the share price. Clearly the company’s product has potential. But it will take time and money to try and realise that potential. This has become clearer as Renalytix has ramped up its sales efforts by recruiting more staff. General and administrative costs in the quarter almost doubled on the year. The company identified increased headcount as a key driver for that increase.

Over time, if the sales effort pays off by generating substantial new revenue, I think it could trigger investors to start focusing once more on the long-term potential for Renalytix. But at the moment, a lot of shareholder attention is on the cost and speed of the sales push. If that continues to be the case, I think the share price could keep sliding from here.

I would still buy this UK medtech share

Despite that, I currently have no plans to sell my Renalytix shares. Indeed, I would consider using the current price weakness to increase my position.

The market size for kidney diagnostics is huge — and growing. Renalytix has an excellent product that could help it get a good share of the market. The more it sells, the greater the benefits of scale should be for it. So, if it can build revenue strongly enough, that could turn out to be very good news for profitability.

For now it remains to be seen if that will happen. The attractive economics of this business area could lead to more competition, hurting its long-term profitability. But despite that risk, I continue to see the company as an appealing UK medtech share for my portfolio.

Could this be a buying opportunity for the kidney diagnostics specialist? Below I consider what has been driving the share price action and whether I should add Renalytix back into my portfolio.

The growth challenge

Early investor sentiment (including mine) on Renalytix was positive. Its proprietary diagnostic platform offered an attractive business model. Development costs could be substantial. But the platform’s scalability meant that if enough healthcare users signed up, the profits could be substantial.

I think that continues to be the case. But the Renalytix share price is now showing some impact from the challenge of meeting high growth expectations. To launch a service from a standing start requires substantial investment in things like sales capability. In a regulated industry such as healthcare, it can take a while for potential customers to start buying new services. That means revenue growth can be slow at first, while costs stack up.

Growing costs

That’s exactly the picture right now at Renalytix, as shown in the company’s latest set of quarterly results that it released this week. The company has expanded its sales force, begun clinical testing with a couple of new healthcare providers and increased the ordering base in its launch site.

Revenues remain very modest, but at $0.5m they do compare favourably to the zero revenues reported in the equivalent quarter last year. However, quarterly operating expenses also ballooned, from $5.4m to $12.1m. That led to a larger loss for the quarter than in the comparable period, of $10.1m.

Is Renalytix moving in the right direction?

What does all this mean for the company’s outlook? It’s hard to tell just yet. A growing sales force should lead to higher revenues over time. There are signs that things are moving in the right direction on that score, with increased testing and service rollout, albeit still on a limited scale.

But that’s coming in at a growing cost. Net cash outflow due to operating activities in the quarter was $10.5m. With cash and cash equivalents on hand of $54.3m at the end of September, the company has enough cash for around five quarters of such net cash outflow. But a growing cost base as headcount grows could lead to cash outflow quickening. One solution to that would be to raise more funds, for example by issuing shares. That risks diluting existing shareholders.

On balance, I think the company is making the right moves, but it’s too early to tell if they will produce the desired financial results. That explains the fall in the Renalytix share price, I feel. And I think it could fall further in coming quarters if revenues don’t grow substantially.

My next move

I continue to like the Renalytix story. It has a large addressable market and attractive proprietary technology with growing clinical proof to help attract healthcare customers.

But revenues are yet to take off in a big way, while costs are mounting. In the absence of further positive sales news, I won’t be buying Renalytix again for my portfolio right now.

To reduce my risk through diversification, I’d put £1,000 into each of them.

Banking giant

I think Lloyds (LSE: LLOY) remains an attractive home for £1,000 even after the share price has risen 49% in the past year.

A FTSE 100 stock selling at penny share prices is a rare thing. But despite its price tag, this isn’t some minnow. Lloyds has a market capitalisation of £33bn. It is one of the biggest banks in the UK, and the leader in the mortgage sector.

I also think the bank is in rude health. Even during the pandemic last year, it managed to turn a post-tax profit of £1.4bn. It has restarted dividends and plans to increase them in future. I think the dividend outlook, profitable business, and strong market position are all plus points for the Lloyds investment case. I see Lloyds as shares to invest in for my portfolio.

One risk, however, is its heavy concentration in a single market. If the UK economy struggles, that will likely hit Lloyds’ revenue and profits.

Growth shares to invest in

Banking is a mature market, so, as well as Lloyds, I’d look for a growth name in which to invest £1,000.

One growth name I would consider is Renalytix (LSE: RENX). Shares in this developer of AI-enhanced kidney diagnostic tools have more than doubled over the past year. But I think there could be further growth ahead.

The company has recruited a new team of experienced executives to help ramp up its sales operations. It has secured agreement to offer its services to large parts of the US government. The company’s diagnostic platform could enable medical professionals to provide a vital service to patients effectively. A clinical study this year confirmed its efficacy.

As a growth stock, though, there are clear risks here. The company has no revenue to speak of so far, so there is a risk that commercialisation could turn out to be slower and less successful than the company hopes.

Tasty opportunity

I think now is a good time to look again at Domino’s Pizza (LSE: DOM). I would consider these as shares to invest in with £1,000 of the £3,000.

The well-known chain of pizza shops has focussed once again on the British Isles after years of trying to crack the European market. Last month it finalised the sale of its Icelandic business. I think that is positive, as it has economies of scale in the UK it lacked elsewhere. Even after lockdown, demand for takeout sales looks set to remain strong. In its first quarter, system sales in the UK and Republic of Ireland grew 18.7%.

The company formula is simple and proven. I think Domino’s could continue to perform well in coming years. But I do think its menu could be a risk, as consumers shift towards a healthier diet and advertising restrictions grow on food stigmatised as unhealthy. That could hurt sales down the line.

Alan Oscroft: Greencore

My pick is Greencore (LSE: GNC), the food-to-go specialist, whose share price plunged on interim results day. The company reported a £7.9m pre-tax loss for the first half, in a business still devastated by the Covid-19 pandemic. The market hated it.

But Greencore expects to turn things round by the end of the year, and the liquidity is there. If the company can get back to 2019 earnings levels, we’d be looking at a P/E of around nine. I think that’s cheap. I rate Greencore a buy, and I’ve added it to my ISA shortlist.

Alan Oscroft has no position in Greencore.

Roland Head: IG Group Holdings

Online financial trading firm IG Group Holdings (LSE: IGG) has delivered a bumper performance over the last 12 months. Last year’s market crash was followed by a stock trading boom that’s seen the company’s profits double.

Markets are pricing in a return to more normal levels of trading over the coming year, and IG’s share price has been in retreat recently.

This sell-off has left IG shares trading on 13 times forecast earnings for the year ahead, with a dividend yield of 5%. Although IG faces some challenges this year, I think the stock offers good value at this level.

Roland Head owns shares of IG Group Holdings.

G A Chester: Fresnillo 

Silver and gold miner Fresnillo (LSE: FRES) recently reiterated its 2021 production guidance, despite continuing uncertainty presented by Covid-19 in Mexico. 

This FTSE 100 giant, with seven operating mines, is a low-cost producer and has a strong balance sheet. Furthermore, I think its pipeline of new mines and projects, together with a series of improvement programmes, bode well for the longer term. 

I reckon recent weakness in the share price is giving me an opportunity to buy in to the world’s largest primary silver producer at an attractive level. That the dividend yield is now above 2% is an added bonus. 

G A Chester has no position in Fresnillo. 

Harshil Patel: ITV 

ITV (LSE:ITV) looks well placed to benefit from a global economic recovery. Advertising revenues are rebounding from last year, and the majority of ITV’s shows are back in production.  

Several strategic and cost-cutting measures are on track. This is allowing ITV to invest in the acceleration of its strategy to become a digitally-focused media and entertainment company. 

ITV is a quality consumer cyclical stock that offers double-digit margins and return on capital. It’s cash generative and shares trade at an undemanding valuation. It also offers a forecasted dividend yield of 4%. Overall, I’d make it a top stock pick for June. 

Harshil Patel does not own shares in ITV.

Edward Sheldon: Experian

My top British stock for June is Experian (LSE: EXPN). It’s the world’s latest credit data company.

Experian posted a solid set of results for the year ended 31 March recently. For the year, revenue was up 7% on the back of strong demand for its analytics services while earnings per share were up 4%.

Looking ahead, the group said that it expects organic revenue growth in the range of 7% to 9% for FY2022. It noted that it had made a strong start to the year.

Experian is not the cheapest stock, and its valuation does add some risk to the investment case. Overall, however, I think the stock has a lot of appeal right now.

Edward Sheldon owns shares in Experian.

Kirsteen Mackay: Macfarlane 

Macfarlane (LSE:MACF) produces protective packaging for businesses. It mainly has a UK focus, with a growing presence in Europe. A sustained growth in ecommerce is increasing demand for packaging and Macfarlane counts both Hobbycraft and Halfords as customers. Then there’s the climate initiative increasing pressure for sustainable solutions, from which Macfarlane stands to benefit.  

The MACF share price has risen 88% in five years. It has a price-to-earnings ratio of 18, earnings per share are 6p and it doesn’t offer a dividend yield. I’d consider buying MACF shares as I think it has good growth opportunities ahead. 

Kirsteen Mackay has no position in Macfarlane.

Andy Ross: Sylvania Platinum  

Sylvania Platinum (LSE: SLP), the South African platinum group metals miner has fallen from its year high. I think it’s a really great company and see the share price weakness as an opportunity. The company has a tailwind behind it because what it mines is very likely to be used in electric vehicle batteries in the future.  

On top of that, there is a belief amongst some investors that we might be in a commodities supercycle. Even if that’s not the case, I back the shares to do well. It’s a low cost miner, which should be good for margins.  

As always with a growing miner, there are risks to bear in mind. Notwithstanding that though, Sylvania Platinum is my top stock for June.  

Andy Ross does not own shares in Sylvania Platinum.  

Rupert Hargreaves: Glencore

Commodity prices have been ripping higher this year. For example, the price of copper is up around 29% year-to-date. I think Glencore (LSE: GLEN) could benefit from this trend.

Not only does the company produce commodities such as copper, but it also trades them.

This trading business can be highly profitable. As the world’s largest trading business, I expect the demand for Glencore’s services to increase in line with the rising demand for commodities.

The most considerable risk facing the company is the potential for a sudden fall in commodity prices. This could have the opposite effect on the business.

Rupert Hargreaves does not own shares in Glencore.

Manika Premsingh: Volex

Power cords and cable assembly solutions provider Volex (LSE: VLX) has more than doubled its share price in the past year, driven by positive stock market sentiment and its own robust performance. According to its latest trading update, full year revenue for the 52 weeks ending April 4, 2021 will be ahead of market expectations.

For this reason, I am looking forward to its results due in June. I’d also check details of its exploding demand from electric vehicle (EV) customers, which can be a potentially big growth driver for the future.

I would also look at the impact on debt from its acquisition of Turkey’s DE-KA, which may be risky, if high, at a time of continued economic uncertainty.

Manika Premsingh has no position in Volex.

Stuart Blair: Diageo

Diageo (LSE: DGE) is an alcoholic beverages company, with a portfolio of over 200 brands. Its share price has already recovered strongly since last year, and I believe further gains are likely.

Indeed, the company recently announced an improved profit forecast for 2021 and decided to restart its return of capital programme. As the company is now actively returning more money to the shareholders, it’s clearly in a strong financial position.

Diageo’s extensive product range and market-leading position should also help protect it against the risk of another economic slowdown. This is why Diageo is my top stock for June.

Stuart Blair owns shares in Diageo.

Christopher Ruane: Renalytix AI

I recently bought into Renalytix AI (LSE: RENX) despite its limited commercial history. I was impressed by prospective new business opportunities including a US government deal, as well as clinical study results.

The company specialises in kidney diagnostics. That is a significant market with resilient customer spending. The company’s AI-enabled technology gives it a compelling position. As revenues grow I expect Renalytix’s profits to benefit from the scaleability of its technology.

One risk is that competitors could develop their own solutions and reduce Renalytix’s competitive advantage. 

Christopher Ruane owns shares in Renalytix AI.

Royston Wild: Bloomsbury Publishing 

I reckon Bloomsbury Publishing (LSE: BMY) could be a top UK stock to load up on this June. In fact I’d get my skates on and buy it before the release of full-year results on Wednesday, 2 June. 

The Harry Potter publisher has a history of lifting its profits projections in recent times. And it was at it again last time it updated the market with a pre-close update in March. Bloomsbury has benefitted from the uptick in reading during Covid-19 lockdowns. But I reckon the company’s high-quality stable of titles — along with its foray into academic publishing — will keep the top line fizzing. 

Royston Wild does not own shares in Bloomsbury Publishing.

Dan Peeke: HSBC

My favourite UK share for June 2021 is HSBC (LSE:HSBA).

I mentioned in an article towards the end of April that HSBC’s price-to-book ratio was 0.6. It still is, and I think that’s a bargain. On top of this, the company is beginning to focus on its Asian ventures. This is where more than 80% of its 2019 profits came from, so I think that’s the perfect approach.  

The company’s withdrawal from the US and difficulty generating revenue thanks to low interest rates are setbacks, but I’m still confident that it’ll make a good long-term investment.

Dan Peeke doesn’t own shares in HSBC.

Paul Summers: BlackRock World Mining Trust

My top stock for June is the BlackRock World Mining Trust (LSE: BRWM). As it sounds, this invests in a basket of the biggest miners in the world. It also pays an attractive dividend (currently 3.3%). 

Naturally, investing in the cyclical commodities market won’t suit all investors. Some may also baulk at the 1% ongoing charge. Even so, this is arguably the least risky way of getting exposure to the huge demand for metals such as copper from electric vehicle manufacturers in the years ahead.  So, despite rising 80% in the last year alone, I think there’s more upside ahead. 

Paul Summers has no position in the BlackRock World Mining Trust

Nadia Yaqub: Premier Foods

I think things are turning around for Premier Foods (LSE: PFD). Its recent full-year results were impressive, which saw a strong increase in revenue and operating profit. Even net debt has fallen to a manageable position.

The key thing to note is the reinstatement of the dividend. The company will pay its first income payment in 13 years. Clearly the firm’s financial position is improving. It’s also ramping up growth with new product launches. I reckon this is a sign of good things to come and the stock could rise further.

Nadia Yaqub does not own shares in Premier Foods

Ben Hargreaves: Polymetal International 

With concerns over inflation causing a degree of volatility in the market, I think holding shares of a solid dividend earner like Polymetal International (LSE:POLY) is a good idea. At 5.7%, the dividend is healthy and the business itself is well-positioned, as a miner of precious metals.  

The bulk of the company’s revenue comes from gold mining and the price of the metal is currently up 11% over the last year. In addition, the company is in the top five silver producers worldwide whilst its price has increased 62% in the same time period. Though the company’s shares can fluctuate on the price of precious metals, I believe the strong dividend still provides an adequate cushion to make it a solid investment. 

Ben Hargreaves does not own shares in Polymetal International.

Proven adman

I was surprised recently to notice that Martin Sorrell had bought 10,000 shares in the company he leads, S4 Capital (LSE: SFOR). After all, he already held over 54m shares in the company. Why buy more?

Like me, he apparently remains excited about the prospects for these UK growth shares. He bought on 17 May during a fallback to £5.13 and the shares have now bounced back to £5.60. Over the past year, the S4 Capital share price has put on 130%.

With his track record at WPP, Sorrell has proven his ability to build an ad agency network at scale. He’s doing the same thing at S4, which now numbers almost 5,000 employees in 31 countries.

UK growth shares

I regard these as growth shares because the company is positioned in digital marketing, which continues to increase in size. With its wide offering and exclusive focus on digital, S4 is positioned to ride this rising tide. That combines with Sorrell’s dealmaking prowess to make S4 capital a growth machine.

The company’s first-quarter results showed revenue up 71%. Even stripping out the impact of acquisitions, like-for-like revenues rose 35%. Reported gross profit also rose 71%, with a like-for-like increase of 33%.

The company is looking to tap the bond markets so it can build a £500m war chest for acquisitions. I continue to see strong growth potential for S4. I would consider buying more of these UK growth shares for my portfolio today.

However, the role of Martin Sorrell here is a risk. While the company’s talent pool is growing fast, it still seems to rely on the vision, energy and skill of its founder. If for any reason he left suddenly, I think it would hurt the S4 Capital share price.

Medical exposure

I recently opened a position in Renalytix AI (LSE: RENX). These UK growth shares made it into my portfolio because, like S4, I think they could be a way to benefit from the increased role of digital technology.

In the case of Renalytix, that’s in the field of kidney diagnosis. Its artificial intelligence platform may allow it to deliver this vital service in a cost-effective way.

Growth potential

I’ve been following Renalytix for a while. But what made me decide to buy these UK growth shares was a combination of two news stories I thought boded well. First came positive results from a clinical study into the use of the company’s flagship product. Then a deal with the US government was announced. It enables Renalytix to supply customers such as the US military.

Such sales are not guaranteed, however. One risk with the Renalytix AI share price is that sales may not materialise fast enough. Competitors are working in the same space. They could impact the revenues it’s able to generate by developing their own cheaper alternatives.

Here I look at what is behind the share price jump and what I’d do next.

Positive news for the Renalytix AI share price

On Thursday, the company announced that it landed a contract with the US government. It could run for up to a decade.

Specifically, the contract concerns the provision of Renalytix AI’s flagship product KidneyIntelX. It covers laboratory testing that can be provided in over 140 US government departments and bodies. There is no cap on the volume of services, and pricing is set at $950 per reportable result. Initially the contract is for five years, with an option for it to be extended for the same period.

How this helps Renalytix AI

I think this is big news for Renalytix AI.

First, the tests that could be supplied under the contract may add up to substantial revenue over time. There is no guarantee of revenue. But KidneyIntelX is the only artificial intelligence-enabled test that improves diagnostic rates of reduced kidney functionality among high-risk patients suffering from Type 2 diabetes. I think that means that there will be substantial demand for it from various parts of the US government, such as the military and veterans agencies. Over 29m Americans are estimated to have Type 2 diabetes.

The second reason I think the news could be very positive for the Renalytix AI share price is because it provides a proof of concept. That could help bring the KidneyIntelX to a much wider market, increasing revenue potential.

So far KidneyIntelX has had a limited rollout. But now that the US government has signed up to use the platform, I think that will reassure many potential customers.

Risks with the contract

However, while the contract sounds like good news, it is also worth considering that there are some risks involved. Ramping up to large-scale delivery can be a challenge. The test and trace programme in the UK is a recent reminder of that.

Additionally, a fixed price isn’t always a good thing. I don’t know what Renalytix AI’s projected profit margins are on the agreed price. But locking in a price years in advance can turn out to be bad if costs soar, for example, due to unforeseen challenges rolling out the product to a wide audience. That could affect profit margins.

My move on the Renalytix AI share price

This isn’t even the only good news this week for Renalytix AI. On Tuesday, it announced positive clinical outcome data for the product the US government has agreed to buy.

Previously I outlined my concerns about the Renalytix AI share price, such as possible production delays or slow commercial adoption. These are still risks, but this week’s news has assuaged some of my doubts.

I am now considering opening a position in the company.

However, to increase the odds of ten-bagging, I think small cap stocks is the place to look.

Investing in shares which can grow quickly – and what I’d avoid

When I talk about smaller shares I’m not talking penny stocks – I’d define it more as those with a market cap between £50m and £250m. I want to avoid the very smallest and therefore riskiest companies. A 50% loss on an investment means a 100% gain is needed just to get back to breakeven. That’s achievable, but difficult to do consistently.

It’s better to just try and reduce your odds of making the big loss in the first place. So I invest in smaller caps with a long-term mindset and ask: do I really want to hold a small part of this company?

This is about investing in high-quality stocks that happen to have low market capitalisations. Probably because they are small, growing businesses, or they have been previously mismanaged.

What’s good about small cap shares? 

Thre are numerous benefits, but among the most important is greater inefficiency in the market. That’s because institutional investors, like the banks and pension funds, do less research on smaller-cap companies. As a result, there are more opportunities to buy undervalued shares.

On top of that, small caps can more easily double in size. It’s easier to grow from being worth £50m to £100m, for example, than it is to go from £50bn to £100bn.

Thirdly, smaller companies can generally be more agile and in many cases will have founders retaining significant shareholdings. This often makes them more entrepreneurial.

A high-risk/high-reward share I have my eye on

The healthcare artificial intelligence (AI) company RenalytixAI (LSE: RENX) is a share that I think has huge potential. Through its KidneyIntelX platform, it provides in vitro diagnostics focused on optimising clinical management of kidney disease.

This is a huge market it’s targeting in the US. There it’s awaiting approval from the Food and Drug Administration (FDA) for its tests. Once approved these will be sold at $950 apiece. Then the company should go from no revenue to very fast growth.

If the FDA decision comes back against the company, or there is a delay in getting approvals, I’d expect the share price to fall. So there’s a real risk with this share. Especially as at the moment it has no other revenues.

Looking long-term, though, I think AI will make big inroads in the healthcare industry over the next decade. I hope, and expect, that RenalytixAI will be a part of that growth.