Today I’m looking at three companies with updates in September, all of which I think offer attractive progressive income.

Specialist recruitment

My first pick is SThree (LSE: STEM), due to bring us a third-quarter trading update on 20 September. The recruitment company, which specialises in the IT sector, saw its share price collapse again after a sharp spike in 2021.

Figures for the first half looked impressive, with net fees up 25% and operating profit up 62%.

There was net cash on the books, and SThree lifted its interim dividend by 67% to 5p per share. Forecasts suggest a 4% yield for the full year, and a price-to-earnings ratio of below 10.

That dividend payment appears cautious to me, with cover likely to be strong.

There is cyclical risk here, though. In the two pandemic years, the dividend was drastically cut. And there’s a recession on the horizon. But on balance, I see desirable long-term income.

Dividend recovery

My next choice is one that’s on something of a tentative recovery. I’m looking at construction firm Galliford Try (LSE: GFRD).

The company suffered two years of tough losses during the pandemic, and suspended its dividend in 2020. In 2021, it came back at a much lower level. The 4.7p dividend that year was but a shadow of the 77p paid in 2018. It yielded 3.3% on the share price at the time.

Forecasts show the dividends growing slowly but steadily. They predict a yield of 4.5% this year, growing to nearly 6% by 2024. Again, they should be well covered.

Like all broker forecasts, these are to be treated with caution. And at this stage in its recovery, Galliford Try is still a risk.

But the company’s July trading update spoke of “strong performance across operations resulting in increased revenue, pre-exceptional profit and operating margin.” Full-year results are due on 21 September.

Soft drinks

My final selection is AG Barr (LSE: BAG), which I think might hold up well in a recession. The soft drinks producer will deliver first-half figures on 27 September.

Barr did suspend its dividend during the pandemic, even though it still recorded healthy profits. But it’s a company that likes to trade with net cash, and I find that refreshing these days.

August’s trading update revealed a 19% increase in like-for-like revenue.

Inflation could hit trading, though. And the company pointed out that it’s suffering rising costs just like everyone else. It’s in a very competitive business too, so that’s something to watch out for. Part of Barr’s business comes from the hospitality sector. So there may be pressure there through the looming recession.

The dividend is modest, with forecast yields of around 3%. But I think we could be looking at a long-term defensive income investment here.

So far however, these businesses are still thriving. A chronic jobs shortage means net fees are soaring, as blockbuster results today from Robert Walters show.

Net fees at the firm soared 26% year-on-year between April and June. Fees were also the highest second-quarter number on record and prompted Robert Walters to lift its full-year profits forecast.

SThree’s no stranger to lifting its own earnings estimates either. In mid-June, it raised forecasts after announcing a 25% jump in net fees in the first half, to £203.1m. Critically, the small-cap said it witnessed “very strong” growth in its German, US and Dutch markets too.

A top stock for the tech age

I like SThree in particular because of its focus on the STEM (Science, Technology, Engineering and Mathematics) sectors. These are poised for strong growth over the long term as areas like healthcare, renewable energy, automation and the Internet of Things continue to evolve.

In the meantime, City analysts are confident the company should continue growing earnings despite rising economic headwinds. Increases of 9% and 8% are forecast for the financial years to November 2022 and 2023 respectively.

At current prices, these forecasts leave SThree trading on a forward price-to-earnings (P/E) ratio of around 10 times. Such a low valuation comes despite the firm’s impressive resilience so far. I’d use recent share price weakness as a buying opportunity.

5.6% dividend yields

Urban Logistics REIT (LSE: SHED) is another dirt-cheap UK share on my radar. I like this particular stock because it offers terrific value from both a growth and earnings perspective.

The property stock trades on a forward price-to-earnings growth (PEG) ratio of 0.8. A reminder that any reading below 1 suggests that a stock is undervalued.

Meanwhile, Urban Logistics carries meaty dividend yields of 5% and 5.6% for the next two financial years.

A red-hot property share

Urban Logistics invests in big-box warehouse and logistics assets which are critical in an age where e-commerce is growing sharply. In fact, supply of these properties in Britain remains low while demand is ripping higher, driving rental income at firms in this area to the stars.

Helped in part by recent acquisitions, rental income at Urban Logistics soared 59.8%, to £36.5m, in the 12 months to March. Latest financials also showed the value of its properties grow 25.4% on a like-for-like basis to £153m.

An acquisition-led growth strategy can leave a company open to risks like unexpected costs. But I’m encouraged by the excellent track record Urban Logistics has on this front.

City analysts think earnings here will rise 25% in this financial year to March 2023 and 9% next year too. And I expect the business to deliver strong and sustained profits growth over the long term too.

Barnstorming results

And to answer my own question, buying the stock now looks like a good idea for me. After all, as we might expect today’s figures are good. For the 12 months to 30 November, revenue at constant currency rates increased by 14% compared to the year before. And of that, fee income rose by 19%.

That turnover caused earnings per share to shoot up by 143%. And the company managed to increase its net cash position by 15% to £57.5m. The outcome clearly pleased the directors and they rewarded shareholders with a 120% lift in the total dividend for the year.

I reckon much of the good performance comes down to the success of the company’s strategy. Sthree describes itself as “the only global pureplay specialist staffing business focused on roles in Science, Technology, Engineering and Mathematics (STEM)”.

Interim chief executive Timo Lehne said in today’s commentary, the “record-breaking” results demonstrate the company has a “robust” strategy focusing on STEM and flexible working. He said the market rebounded in 2021 after the challenges caused by Covid-19, and demand for STEM rose.

Sthree capitalises on demand for STEM skills by placing engineers, developers, scientists and other professional people into industry where they’re needed.  And Lehne reckons there’s been “particular” client demand for the company’s employed contractor model. And Sthree leads that market segment in many countries. The category accounted for around 32% of overall net fees.

A robust outlook

Looking ahead, Lehne sees strong momentum in the business driven by robust demand for the talent the company provides. And he expects “double-digit” growth in 2022. Meanwhile, the valuation looks undemanding, despite the buoyancy of the stock today.

With the share price near 465p, the earnings multiple based on today’s results works out at just below 15 and the dividend yield is around 2.4%. However, if the business achieves the growth in earnings it hopes in 2022, the forward-looking valuation numbers could reduce. But such positive expectations becoming  a reality is never certain and it’s possible for operational challenges to arise that could derail the forecasts.

And another factor I’m wary about is the high degree of cyclicality in the firm’s business model. If demand cycles down, it’s likely that so will profits, dividends and the share price.

Nevertheless, I’m bullish about the prospects for world economies and the labour market for all timeframes right now. And the strength of Sthree’s balance sheet also encourages me. So I’m tempted to buy some of the shares now to hold with a timeframe of at least five years in mind.

Recruitment drive

SThree is an international firm providing permanent and contract specialist staffing services for information and communication technology, banking and finance, energy, engineering, and the life science sectors. The ticker STEM derives from its focus on science, technology, engineering, and mathematics.

One of the primary reasons I class SThree as one of my best shares to buy now is diversification. In my opinion it possesses this on two fronts. Firstly, it operates in a diverse range of industries and is able to place staff in a lot of different sectors, some of which are booming. A prime example is technology. Approximately half of its business comes from tech. Life sciences and engineering follow closely with banking and finance accounting for less than 10% of its business.

In addition to the sectors in which SThree operates, it is diverse in its locations. In recent years it has made massive investments to bolster its global footprint.

Share price and performance

As I write, I can buy shares in SThree for 498p per share. Rewind to this time last year and shares were trading for approximately 100% less at 247p per share. This is a healthy share price rise which reflects the company’s recovery since the pandemic slowed its progress. In fact, SThree’s share price has surpassed pre-crash highs of 386p per share too.

Another reason I rate SThree as one of my best shares to buy now is its consistent performance. Last month, on 19 July, it released its half-year trading report which made for excellent reading in my opinion.

SThree pointed towards better market conditions and a rise in demand for STEM skills. Results confirmed an increase on all fronts compared to the same period last year. The highlights for me were an increase in operating profit increasing by 101% and profit before tax increasing by 110%. In addition to this, it increased net cash by 53% compared to the same period last year. Finally, SThree confirmed that FY21 results would be ahead of expectations based on such a fruitful first half year.

SThree also has an excellent historic track record of increasing revenue and profit before the pandemic affected this year-on-year upward trend. As a savvy investor, I fully understand that past performance is not a guarantee of the future but I prefer companies with a good track record.

Even the best shares to buy now have risks

My first issue with SThree is that it is trading at all-time highs. This means that any bad news or negative market reaction could cause a sharp share price drop. Second, SThree was badly affected by the pandemic. If there were to be further restrictions based on the rising number of Covid-19 cases, there could be a repeat of this.

Overall I would by SThree shares for my portfolio at current levels. I do believe it can continue to grow. SThree’s track record and growth to date convince me it could be a good addition to my portfolio despite the risks involved. It is high on my best shares to buy now list.

In Britain, demand for workers is rocketing as Covid-19 restrictions are unwound and the British economy bounces back. But a massive shortage of worker availability could affect SThree’s ability to exploit this upswing. The Recruitment and Employment Confederation (REC) says that pandemic-related uncertainty and fears over job security caused candidate availability to drop at the second-sharpest rate since its Report on Jobs study began. The prior record was set in June.

Furthermore, REC’s report commented that “Brexit was also cited as a key factor reducing the supply of workers”. I would argue that this represents a much larger long-term threat to UK shares like SThree.

Risks baked into the cheap share price?

That being said, I think that the problems created by this candidate shortfall could be reflected in SThree’s share price. City analysts think earnings here will rise 77% in the fiscal year to November 2021. Therefore at 500p per share the UK share trades on a forward price-to-earnings growth (PEG) ratio of 0.3.

It’s widely considered that a reading below 1 suggests that a stock could be undervalued. So it seems that SThree’s low multiple more than bakes in the threat posed by worker shortages in Europe. The company sources 38% of total net fees from Europe (excluding Austria, Germany, and Switzerland, where 34% of group fees are generated from). The UK accounts for 11% of net fees at group level.

Besides, SThree’s significant worldwide footprint helps to take the sting out of those European worker shortages. In the US, where the UK share sources 25% of net fees from, a scarcity of available candidates has started to improve more recently. The remaining 3% comes from Asia Pacific, where the prospect of strong economic growth and booming population levels bodes well from 2021 onwards.

Why I’d buy this UK share for long-term gains

SThree concentrates on supplying employees to the STEM (science, technology, engineering, and mathematics) arena. These four sub-segments are ones in which worker shortfalls have been particularly bad in recent times. However, as a long-term investor I think this focus could help me make great returns.

In an increasingly digitalised and technical world it’s likely that job numbers in this sector will soar. But as well as the opportunities created by our increasing demand for connectivity, other exciting areas for SThree include increasing demand for green technologies and the rising emphasis on scientific roles following the global pandemic.

This explains, too, why City analysts think SThree’s earnings will continue to rise solidly beyond this year. A 14% annual increase is predicted for financial 2022. While not without risk, I think the recruiter could prove to be a top UK share for me to buy for the next 10 years.

SThree: robust performance

Recruiting company SThree (LSE: STEM) is trading near all-time highs today after it released a robust trading update. Net fees charged by it grew by 22% in the second quarter of 2021 compared to last year. Even compared to 2019, the science, technology, engineering, and mathematics (STEM) focused company has seen an 8% increase. This tells me that the company has put the pandemic’s impact behind it. 

Supported by diversification

I reckon that its diversification has helped here. Almost half of the company’s business comes from technology, followed by life sciences and engineering. Banking and finance accounts for less than 10% of it. The past year has been poor for financials, as the sector is closely linked to economic performance. On the other hand, a look at FTSE 100 technology related companies from software providers to e-tailers shows that they have had a positive year. Some smaller life sciences companies have also benefited from research on Covid-19 drugs, tests, and vaccine development. 

SThree is also geographically diversified. Germany is its biggest source of revenues, followed by the US and Netherlands. The UK is only its fourth largest market. All its top three markets have grown in the first-half of 2021, with the US having shown the most notable increase of 24%. 

Although the company has held back from any forward looking statements this time, it does mention an upgrade in its profit expectations for the year made earlier this month.

I think all looks well for SThree, but it is at a high. And some patience may be required before it shows big returns from here. That said, it looks like a good long-term stock for me to buy. 

Saga: lack of clarity

By contrast, cruise operator and insurance provider Saga (LSE: SAGA) appears less like a sure thing to me. Before the pandemic, cruises brought in more than half its revenues, followed by a big share from insurance. However, cruise revenues have dwindled as travel remains under lockdown. With strong cruise bookings, I would typically be less concerned about the current weakness in the segment. 

However, these bookings will materialise only if government restrictions are lifted. With a rise in Covid-19 infections, there is much media speculation on whether the final phase of the lockdown will indeed be lifted in time. Moreover, its insurance sales are also behind last year. 

My takeaway for the UK shares

Saga could be a good share to buy if I am convinced about the prospects for the travel industry. At this point, however, I am not. I would like to wait and see how the situation develops and make a decision accordingly. On the other hand, SThree looks like a good UK share for me to buy today, whether or not the markets rise. 

Prices of the recruitment specialist have spiked 7% on Thursday to 455p per share. They had hit fresh record peaks of 459.5p earlier in the session before paring gains. The reason why? The release of further brilliant trading numbers for the start of 2021.

Profits to beat expectations

In its latest trading release, SThree — which concentrates on the Science, Technology,  Engineering and Mathematics (or STEM) sectors — said that business activity was “stronger than expected across the majority of the group’s portfolio” in the three months to May.

It witnessed “high levels of demand” related to Life Sciences and Technology roles throughout its second fiscal quarter. The firm added that “there have been continued strong performances from the US, German and Dutch businesses.”

The recruiter noted that uncertainty persists around the second half of the financial year. This is due to the emergence of Covid-19 variants and the impact of annual leave backlogs for contractors, as well as for its own employees.

However, SThree said that its strong first-half showing leads it to believe that pre-tax profit for the full year to November 2021 will be “materially above market consensus.” Current broker consensus sits around the £39.7m mark, the company noted.

What they said

Commenting on SThree’s robust recent results, chief executive Mark Dorman said that “the strong performance we have seen across the second quarter reflects the high levels of demand that exists for our STEM offering.”

He added that while “uncertainty remains, we have proven our ability to execute whatever the circumstances, giving us confidence for the remainder of the year and beyond.”

Why I’d buy SThree shares today

Even though SThree’s share price is still going from strength to strength, I think the UK recruitment share still offers terrific value for money. As I type, City analysts think earnings per share will rise 40% year-on-year in fiscal 2021. This leaves the company trading on a forward price-to-earnings growth (PEG) ratio of 0.7. A reading below 1 suggests that a stock is undervalued by the market.

Yet as SThree pointed out, the trading environment remains packed with uncertainty. Any fresh upsurge in Covid-19 cases could leave the company’s recent recovery in tatters. Still, as a long-term investor I’m tempted to buy given that the number of STEM jobs looks set to balloon as the world becomes more digital (as per a recent World Economic Forum report). I’d happily add this soaring UK share to my Stocks and Shares ISA today.

Here are a couple I’m thinking of buying for my Stocks and Shares ISA.

A cheap UK share on my radar

High hopes of a strong economic recovery have turbocharged the share prices of London’s listed recruiters over the past year. Take SThree (LSE: STHR) for instance. It’s risen almost 75% in that time as hiring across its STEM (science, technology, engineering and mathematics) sectors have improved. I like this cheap UK share’s operations in niche markets, a quality I think will deliver handsome long-term growth. But the recovery in recruitment markets is in danger of flailing if the Covid-19 crisis drags on.

Fresh jobs coming out of the US has also caught my attention for the wrong reasons. The latest non-farm payrolls report showed just 266,000 new jobs created in April. This missed the predicted 1m roles and is down sharply from the 770,000 jobs created in the prior month. The US is SThree’s second-largest market behind only Germany. A further worsening of jobs news from either of these countries, whether or not related directly to the Covid-19 emergency, could see the recruiter topple following those recent heady share price gains.

That said, I think SThree looks temptingly cheap at current prices. City analysts think earnings at the recruiter will rise 38% in the current fiscal year (to November 2021).  This leaves it trading on a forward price-to-earnings growth (PEG) ratio of 0.6. Any reading below 1 suggests that a stock could be undervalued by the market. And this leaves a big margin of comfort for value investors like me who are worried that the recruiter’s immediate earnings forecasts could be blown off course. I’d happily still buy this cheap UK share for my ISA today.

A FTSE 100 share I’d buy

HSBC Holdings (LSE: HSBA) meanwhile offers plenty of all-round value today. Not only does the FTSE 100 bank trade on a rock-bottom forward PEG multiple of 0.1. This cheap UK share offers a mighty 4% corresponding dividend yield to boot. Compare that with the broader 3.5% prospective average which British stocks offer today.

Banking stocks are the amongst the most cyclical out there. Demand for their financial products picks up strongly when economic conditions improve. That’s why I think HSBC is a great buy for the new bull market. City analysts think earnings here will rise 141% in 2021, and I can see profits rising strongly over the long term as emerging market demand for banking services booms. Remember, though, the scale of profits growth at HSBC this year and beyond could be significantly hampered by the persistence of low interest rates by central banks.

One of my favourite ISA buys

I don’t believe there’s a more reliable growth share out there than Bunzl (LSE: BNZL). Not even the worst public health emergency for a century could derail the FTSE 100 share’s long record of annual earnings growth. Instead the Covid-19 crisis has turbocharged demand for its cleaning products and personal protective equipment (or PPE).

This resilience is why I love Bunzl and have added it to my own Stocks and Shares ISA. The UK company supplies a broad range of products and services for a wide variety of industries and sectors. As such it has the sort of strength through diversity to let it weather most crises. Bunzl actually saw pre-tax profits soar 23% in 2020 in spite of the public health emergency.  

I’m expecting another sunny trading update when Bunzl releases first-quarter trading numbers on Wednesday 21 April. But remember: this Footsie firm operates in highly-competitive markets and so even peddling extremely hard is no guarantee of future earnings growth.

Another top UK growth share

I think that investing in recruiter SThree (LSE: STEM) could be another good idea right now. Positive news flow across the industry continues to come thick and fast (the Robert Walters share price just hit multi-year highs on the back of reassuring first-quarter numbers). There’s still a long way to go but now could be a good time to buy this particular UK reopening share.

SThree also put out positive numbers of its own in March. Then it said that “we’ve seen improved underlying activity across each region of the group during the first quarter”. Consequently net fees in the three months to March were down just 1% year on year. This is better than the 7% and 14% drops endured in the fourth and third quarters of 2020 respectively.

This improved momentum has lifted the SThree share price to its most expensive since April 2017, at close to 400p per share. But despite this recent strength SThree’s shares still look mightily cheap on paper. City analysts think the company’s annual earnings will climb 41% in the current fiscal year (to November 2021). This results in a forward price-to-earnings growth (PEG) ratio of just 0.6. 

Conventional thinking suggests that a UK share trading on a reading of below 1 is undervalued by the market. Though be warned that the third wave of Covid-19 sweeping across Europe could put paid to these current bright earnings forecasts. Germany is SThree’s single largest market (responsible for around a third of group net fees), while the Netherlands and the UK are also important territories. It’s quite possible then that the recruiter’s share price could sink rather than surge.

Each of the companies I’ve chosen is a mid-sized business with a solid track record. Recent news suggests to me that all three could outperform the market in 2021.

A defensive winner?

Soft drinks group Britvic (LSE: BVIC) has a defensive product and much-loved brands such as J2O, Robinson’s and Fruit Shoot. The firm’s products are an automatic purchase in many situations.

Unfortunately, many of these purchases take place in pubs, restaurants, and cafes. Food and drink outlets have suffered long periods of closure during lockdown. As a result, Britvic’s revenue fell by 7% last year. Underlying profits fell by 22%.

I don’t see these numbers as a big concern. My impression is that Britvic’s management did everything it could to manage the situation. When life returns to normal and the hospitality trade reopens, I expect sales to recover to normal levels.

Britvic shares have fallen by about 15% over the last year. Although the shares rose on vaccine news in November, they’ve since slipped back again. I reckon Britvic looks decent value at the moment, on 14 times forecast earnings, with a 3.5% dividend yield. This is definitely a share I’d buy at the moment.

Profit from tech growth

My next pick is specialist recruitment group SThree (LSE: STEM). Recruiters have suffered during the pandemic as companies cut back on hiring ahead of a possible recession. But SThree’s focus on the so-called STEM sectors — Science, Technology, Engineering and Mathematics — gives me confidence that demand should recover quickly.

Indeed, SThree has already reported improving trading. In November, the company said that trading during the last three months of 2020 was “coming in ahead of expectations”. In December, SThree said that its net fees for the year fell by just 8%, which seems an impressive result to me.

Recruitment is a cyclical business, but SThree has proven to be highly profitable in the past. I expect a good recovery and view this as a growth share I’d buy at current levels.

An emerging market share I’d buy

The final stock I’ve chosen is a company I already own. Asset manager Ashmore Group (LSE: ASHM) is a FTSE 250 firm that specialises in emerging markets. The group is run by founder Mark Coombs, who still owns 31% of Ashmore stock.

I’m a fan of owner-manager companies, as in my experience they’re often run well and with long-term growth in mind. Ashmore was affected by the general turbulence in financial markets last year, but the company’s results for the 12 months to 30 June 2020 showed a modest rise in profits and an operating margin of more than 60%.

The company’s balance sheet remained strong too — Ashmore ended the period with more than £700m of cash on hand. Mr Coombs says that economic forecasts for the year ahead suggest that growth in emerging markets will be higher than in the developed world. This could create opportunities for Ashmore.

Although Ashmore’s share price has risen since I bought the stock, the shares still yield almost 4%. I think further growth is likely and plan to buy more.