Top shares for January

Kevin Godbold: Britvic Despite negative macroeconomic news, I view Britvic’s (LSE: BVIC) branded soft drinks business as defensive and attractive. I like the record of steady growth in revenue, normalised earnings, operational cash flow and the dividend. Plus City analysts predict decent advances in all those measures over the next couple of years.

Britvic has thrown off uncertainty caused by the soft drinks levy and a carbon dioxide shortage, yet the valuation is modest and the dividend worth collecting. The shares have been consolidating, and I think operational progress could drive a break-out from the recent trading range, perhaps in January.

Kevin Godbold owns shares in Britvic.

Edward Sheldon: DS Smith My top stock for January is FTSE 100 packaging specialist DS Smith (LSE: SMDS).

Shares in DS Smith fell significantly in the second half of 2018, on the back of trade war uncertainty and concerns relating to oversupply in the containerboard market. However, the sell-off looks excessive in my view, as the group’s December half-year results were robust, with revenue climbing 16% and adjusted operating profit surging 32%. A 14% hike in the dividend was another highlight, and suggests that management is confident about the future.

At current levels, the shares trade on a P/E of just 8.4 and sport a prospective dividend yield of over 5%. To my mind, those metrics are attractive.

Edward Sheldon owns shares in DS Smith.

Rupert Hargreaves: Auto Trader At first glance, Auto Trader (LSE: AUTO) might appear overpriced. The shares are currently trading at a forward P/E of 22.8. However, I think this multiple could actually undervalue the group’s prospects.

Over the past five years, Auto Trader’s earnings per share (EPS) have jumped from 1.5p to 17.7p and analysts are expecting them to hit 22.2p by 2020. This kind of growth is worth paying for. What’s more, the firm is highly profitable with an operating profit margin of 68% and a return on capital employed – a measure of profit for every £1 invested in the business – of 60%.

These metrics imply Auto Trader is one of the most profitable business on the London market, and that deserves the high multiple in my view.

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Rupert Hargreaves does not own shares in Auto Trader.

Royston Wild: Robert Walters Robert Walters (LSE: RWA) is a share I reckon could get the new year off to a bang on January 10, the date on which fourth-quarter financials are slated for release.

The recruiter’s share price has collapsed by around a third since hitting record peaks in late August. This is despite the market being peppered with more positive trading updates in that time, most recently in October when Robert Walters advised of a record third-quarter profits.

Even if it doesn’t rise next month,Robert Walters and its forward P/E ratio of 11.4 times are too good to miss, in my opinion. I’m convinced that, thanks to its ongoing international expansion drive, it has the tools to deliver stunning returns in the years ahead. And that makes it a top buy right now.

Royston Wild does not own shares in Robert Walters.

Paul Summers: H&T Picking a stock that will hold its own in an increasingly fragile market is becoming difficult. However, I think pawnbroker H&T (LSE: HAT) is worth a look.

Right now, the stock can be yours for just under eight times predicted earnings which seems cheap for what could be a good company to hold if the UK economy does suffer post-Brexit. In addition to its counter-cyclical qualities, H&T could also benefit from its exposure to the gold price, which tends to rise when equities struggle.

There’s a 4.6% dividend yield forecast for next year based on the current share price, covered well over twice by anticipated profits.

Paul Summers does not own share in H&T.

Roland Head: BT Group (LON:BT) FTSE 100 telecoms giant BT Group (LSE: BT-A) may seem like an unpopular choice at the moment. But I think it’s possible that the worst is now past for the group.

A renewed focus on mobile and broadband services should combine with £1.5bn of planned cost savings to improve profitability and cash generation. Although a dividend cut remains a risk, the expected payout should be covered 1.7 times by earnings. I think there’s a good chance it will be sustainable.

The shares now trade on less than 10 times forecast earnings and offer a 6% yield. I rate BT as a long-term buy.

Roland Head owns shares of BT Group.

Peter Stephens: Diageo (LON:DGE) Given the lack of clarity regarding Brexit and the uncertain near-term prospects for the UK economy, internationally focused Diageo (LSE: DGE) could offer investment appeal. The company has exposure to a range of leading economies across the world, while its exposure to emerging markets could provide a growth catalyst in the long run.

Diageo’s decision to rationalise its stable of brands and focus on improving efficiency could create a stronger business which is better able to generate high profit growth. With a high degree of customer loyalty, dominant positions in a range of beverage segments and a growing bottom line, the stock could outperform the FTSE 100 in the long run.

Peter Stephens owns shares in Diageo.

G A Chester: Centamin Last year wasn’t good for gold or gold miners. However, I see scope for a much-improved performance in 2019, and I rate FTSE 250 firm Centamin (LSE: CEY) a top buy for the new year.

Production for 2018 is set to come in at 480,000 ounces, but I’m expecting guidance for 2019 – due for release in the next two weeks – to show a considerable advance on this. As a result, I anticipate a 2018 dividend yield of about 4%, rising to 5% this year.

Centamin is a high-quality, low-cost producer and has a balance sheet boasting $292m cash and no debt.

G A Chester has no position in Centamin.

The Motley Fool UK owns shares of and has recommended Britvic. The Motley Fool UK has recommended Auto Trader, Diageo, and DS Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.