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Top stock picks for September

We asked our contributors to pick their favorite ASX stocks to buy this month. Here are their top ideas. 

Mike King: Brierty Limited (ASX: BYL)

As an engineering and contracting business, Brierty is the baby thrown out with the bath water of the mining services sector.

The company pays a decent fully franked dividend yield of 5.8% and expects to see revenues rise by at least 20% in the next financial year. It is currently trading on an undemanding P/E of 6.3x trailing earnings.

Additionally, Brierty has $26 million of net cash on hand, which is slightly under half the company’s current market cap. The company also has more than $570 million in work in hand and expects to pick up more contracts this financial year.

Motley Fool analyst Mike King does not own shares in Brierty.

Sean O’Neill:  Australian Bauxite Ltd (ASX: ABX)

Bauxite prices are already at record highs and expected to go higher thanks to reduced Indonesian sales and increased demand in China and the Middle East.

Australian Bauxite is perfectly positioned to capitalise on increased demand with an ambition to become China’s sixth largest bauxite supplier. The company also has over 100 million tonnes in high-grade bauxite resources discovered already.

The key obstacle is funding initial mine construction at a cost of $12 million when the company only has $2 million in cash. I hope for a capital raising in order to drive share prices lower, though private funding is equally likely. This is a speculative investment.

Motley Fool contributor Sean O’Neill owns shares in Australian Bauxite Ltd.

Peter Andersen: Pental Ltd (ASX: PTL)

Being a domestic supplier to the monster supermarket chains is no bundle of joy, however Pental is battle-hardened after a near collapse a couple of years ago. This was mainly caused by an unfortunate investment in chemical maker Symex.

Pental owns or licenses several well known brands, including White King, Velvet, Pears, Martha’s Wool Mix, Lux and Softly. Over the past two years, Pental has rationalised operations and paid off debt. Importantly, it has simultaneously invested heavily in new manufacturing facilities and disciplined marketing. As a result the company is now poised for growth.

With no net debt and selling at a tad over 10 times 2014 earnings, I think Pental is an attractive buy.

Motley Fool contributor Peter Andersen owns shares in Pental Limited.

Aryan Norozi: Shine Corporate Ltd (ASX: SHJ)

Legal eagle Shine Corporate Ltd is an Australian litigation company with significant interests in the personal injury market. Since it listed in 2013, Shine has provided sensational returns to its investors.

Shine’s recent growth endeavours look very enticing, and its recent shift from its native ground in Queensland to other states like Western Australia is a smart way to gain more exposure to thriving economies and escape the harsher regulatory hurdles in Queensland’s personal injuries sector.

Its recent acquisitions of Emanate Legal and Stephen Browne personal injury lawyers in Western Australia widen its market share and set it up for some quality future growth.

Shine boasts an extremely healthy balance sheet and trades on a modest price-to-earnings ratio of 16. I think Shine is a perfect candidate for long-term investors. 

Motley Fool contributor Aryan Norozi owns shares in Shine Corporate.

Ryan Newman: Veda Group Ltd (ASX: VED)

It was only in June that Veda Group last featured as my top stock pick, based on the strength of its business model, a compelling valuation and the favourable macroeconomic tailwinds likely to boost earnings over the coming years (low interest rates, strong credit growth).

While its price has gone up marginally since that time, its recent full-year earnings report all but confirmed my expectations of a very bright future. It smashed prospectus forecasts for earnings and profitability and declared a dividend twice as large as expected at 4 cents. Veda is a stock to buy and hold for years to come.

Motley Fool contributor Ryan Newman owns shares in Veda Group Ltd.

Tim McArthur: Virtus Health Ltd (ASX: VRT)

Back on 1 April, I selected Virtus Health as my Top Stock for April. The share price initially rallied from around $7.30 when the article was published to a high in late June of $8.80 – a gain of about 20%. Since then the share price has given up much of those gains with the stock now trading back around $7.80

Interestingly, since my pick back in April, Virtus has had three positive announcements. The first two were very appealing expansion plans – namely the 70% acquisition of Ireland’s leading IVF provider and the establishment of a Virtus Fertility Clinic in Singapore. The third was its full year pro-forma results, which showed a 16.8% increase in profit.

Given the good news flow over the past few months and the lack of a re-rating, I’m reiterating my view that the stock holds appeal at current prices.

Motley Fool contributor Tim McArthur does not own shares in the companies mentioned in this article.

Owen Raszkiewicz: Shine Corporate Ltd (ASX: SHJ)

I second the recommendation of Shine Corporate Ltd, a law firm currently pursuing both an acquisitive and organic growth strategy. It, along with some of its rivals, is focused on consolidating the lucrative personal injury market. It has also begun moving into ‘emerging practice areas’ such as product liability, professional negligence, environmental law, disability insurance and superannuation, landowner rights, asbestos and more.

In its recent full-year result, revenue increased 10%, or $10.3 million and emerging practice areas accounted for $5.8 million of said increase. With an EBITDA margin of nearly 30% and modest price tag, Shine Corporate is a standout buy for long-term investors.

Motley Fool contributor Owen Raszkiewicz owns shares in Shine Corporate.

M2 Group Ltd (ASX: MTU)

Of all the companies to report in August this one was perhaps the highlight. The management team is impressive and seems to have an unrelenting focus on growing the business at a rapid pace. Given the company is now moving into the utilities space, I will not be surprised if it makes a big success of this like it has done with telecommunications and internet services.

Importantly, the last quarter of the prior financial year also saw mobile subscriber growth return, which suggests the availability of a 4G network has halted the customer decline. For the year ahead, the business has forecast 8%-9% revenue growth and 15%-20% profit growth. It pays an attractive fully franked dividend and management’s evident focus on shareholder returns makes it a solid opportunity.

Motley Fool contributor Tom Richardson owns shares in M2 Group. 

Andrew Mudie: UXC Limited (ASX: UXC)

UXC limited is a mid-cap IT company offering consulting services, applications (cloud), and IT Infrastructure in Australia, New Zealand, the U.S., Fiji, India and Vietnam. Group revenue rose 6% in FY14, while earnings fell 30% as a result of five acquisitions.

The most recent earnings puts the company on a PE ratio of 15 and yield of 4.5%, however UXC’s management is aiming to almost double margins over the next two years. This would see profit increase by between 100% and 200% and put the company on a FY16 PE ratio of just 9 and yield of 7%!

UXC is the market leader in many regions and offers a full suite of solutions. If the IT sector bounces back strongly UXC will be leading the charge.

Motley Fool contributor Andrew Mudie does not own shares in UXC. You can find Andrew on Twitter @andrewmudie

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