My best UK share to buy this September (and some I would avoid this autumn)
The Motley Fool
Published Aug 31, 2020 08:51
Updated Aug 31, 2020 09:10
My best UK share to buy this September (and some I would avoid this autumn)
Picking the best UK share to buy in September is a challenge. Markets imploded in March, and now are running wild even as economies enter recession and the coronavirus still plagues us. Some stocks are continue to lag behind, and these are the ones that I think could have value.
However, some will be value traps. Like many of my colleagues, I am not confident in the prospects for the leisure travel industry. Despite cheap-looking valuations, I will be not be buying shares in the likes of Carnival (NYSE:CCL) and TUI (LON:TUIT) in September. I am not convinced the cruise industry will ever recover in full. Travel restrictions are being phased in and out, and there is still a reluctance to travel at all, making things difficult for a package holiday and travel agent outfit.
But there is value to be found out there. I have picked Mondi (LSE: LON:MNDI) as my best UK share to buy this September.
A UK share for September Few gold miners strike gold, so in a gold rush, you want to be the one selling the picks and shovels. In the e-commerce boom, it’s not tools but packaging that is demanded by all order-online-for-delivery businesses and not just the eventual winners. Buying shares in Mondi this September looks like a classic picks and shovels trade for the modern era.
Mondi makes paper and packaging. I grant you this is not an exciting stock, as some of the online businesses no doubt are. But, Mondi has managed to creep its revenues higher from €6,819m in 2015 to €7,268 in 2019. At the same time, net income has gone from €600m to €812m. This is a consistently profitable company that should be getting a boost as the trend to ordering online continues.
Timberland has always been an inviting investment for me. You get capital gains from the land and income from felling the trees and selling them. If prices are low, trees can be left standing, and they keep on growing by about 5% a year. In addition, you also get risk diversification against unexpected inflation because it should drive up the price of lumber and land. Buying acres of prime woodland costs a fortune making a direct investment difficult. But Mondi manages forests to feed its operations, and so its shares offer indirect exposure to timberland, which I like.
Paper profit Mondi did suspend its dividend as the coronavirus crisis intensified, but it has recently given shareholders a special dividend. The total dividend payment of €0.57 for this year is covered more than three times by earnings, so it looks safe. In pence, the dividend is around 50 per share, which at the moment cost 1,488p. The dividend yield on a trailing 12-month basis is about 3.4%, which is not bad. Mondi’s share price did fall in March’s market crash and had not yet recovered in full. This helps the yield. It also keeps the trailing price-to-earnings ratio below 12.
Get The App
Add in a strong balance sheet with debt under control and good liquidity and Mondi looks like a great value share to buy in September.
The post My best UK share to buy this September (and some I would avoid this autumn) appeared first on The Motley Fool UK.
us better investors.
Motley Fool UK 2020
First published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.