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Payday is coming up and these are the top three stocks that make me want to invest cash in them in June.
Marks and Spencer
In 2016, Marks and Spencer Group (LSE: MKS) suffered a crash that wiped out 82% of its share price over the next five years. Since then he has been fighting to recover.
He now appears to be back in the game with a vengeance after posting impressive gains this week. With revenue up 9% and adjusted earnings up 45%, it's no surprise the share price is rising. German bank, Goldman Sachsand J.Morgan all gave positive ratings to the stock this week.
However, it is still unclear. He has a good amount of debt after several years of declines and faces stiff competition from his rivals. As a high-end retailer, it could suffer further losses if the economy worsens. I like the direction it's going, but the share price may fall again.
However, the strategy implemented two years ago to revive the business finally seems to be working. As CEO Stuart Machin noted, sales on both sides of the business (online and in stores) have grown for 12 consecutive quarters.
A favorite British pub
Mitchells and Butlers (LSE: MAB) is a stalwart of the UK pub scene, trading since 1898. However, it was hit hard by Covid and stopped turning a profit in 2020, with negative profits for most of the last few years. However, this year has brought a promising recovery.
In first-half results released this week, it revealed that adjusted operating profits were up 64% compared to last year. Revenue rose 7% from £1.28bn to £1.4bn and earnings per share (EPS) more than doubled from 5.5p to 13.5p. The results sparked a 14% rise in the share price to more than 300p, the highest in almost three years.
But changes in consumer habits, combined with rising costs, threaten its bottom line. It is a powerful and well-established brand, but sector risk persists. There are signs that pub culture could be on the decline in the UK, with fewer young people drinking. M&B still offers the food side of the business, but is primarily known for its alcoholic beverages.
I still plan to buy shares, but I will keep an eye on social developments.
Schroders
Asset management company Schroders (LSE:SDR) received a buy rating for USB this week. That surprised me, considering the stock fell 15% last year. But the Asia-based company's investment products have done very well recently, particularly its Oriental Income and Asia Income funds. This has helped underpin the disappointing results on the European side.
Overall, Schroder shares are estimated to be undervalued by 30% using a discounted cash flow model, so there is potential for growth. The price-to-earnings (P/E) ratio of 15.5 is expected to decline to 12.7 as earnings increase. That could open up several good buying opportunities in the coming months.
But it's not a growth stock, so I wouldn't expect much from the share price. Even positive analysts predict growth of just over 9% for next year. For me, the key value proposition is the 5.5% dividend yield, which is well covered by earnings with a consistent payment history. I buy it for that.
