Top stock picks for August

Westfield Corp Ltd (ASX:WFD), Kip McGrath Education Centres Limited (ASX:KME) and Orion Health Group Ltd (ASX:OHE) are among August’s top picks.

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Ryan Newman: ResMed Inc. (CHESS) (ASX: RMD)

ResMed impressed the market with its fourth-quarter earnings results late last week. Although its profit was impacted by various one-off factors, sales were bolstered by a strong uptake of its newly launched sleep therapy products, especially in the Americas. Overall, sales grew 9% for the quarter or 17% on a constant currency basis.

With strong momentum going into the new financial year, combined with an enormous untapped market, ResMed could be an excellent pick-up for long-term investors. Better yet, it’s trading at a nearly 19% discount to its 52-week high at just $8 per share.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. 

Tim McArthur: Pact Group Holdings Ltd (ASX: PGH)

Finding a stock that offers the combination of defensive earnings streams, coupled with expectations of double-digit earnings growth plus a growing dividend is a tough ask in the current economic climate. Throw in the demand that a stock with all these characteristics also be available at a reasonable price and the list of opportunities narrows significantly.

One stock that does look to meet the above criteria is packaging products manufacturer Pact Group. The group specialises in producing rigid plastic containers for the food, dairy, beverage, chemical, agricultural and industrial sectors. The company has operations throughout Australia and New Zealand along with a growing presence in the Asian region. The stock looks good value to me.

Tim McArthur does not own any shares in Pact Group.

Andrew Mudie: FlexiGroup Limited (ASX: FXL)

I believe FlexiGroup shares have been oversold. Shares are today changing hands at a price 25% lower than they’ve been in the last 12 months while the company trades on a forward price to earnings ratio of just 9, a forward dividend yield of over 6%, and profit is forecast to be 7% higher this year than last. Although the company recently lost its CEO, management remains capable and willing to grow the brand. I see more upside than downside from here assuming a reasonable replacement is found for the CEO.

Motley Fool contributor Andrew Mudie owns shares in FlexiGroup Limited. 

Peter Stephens: JB Hi-Fi Limited (ASX: JBH)

While the outlook for retailers is relatively downbeat, electronics retailer JB Hi-Fi has delivered share price growth of 22% in 2015. That’s partly because of expectations for earnings growth of 5.6% per annum over the next two years and it trades at a discount to the retail sector, with it having a P/E ratio of 14.9 versus 15.4 for its sector. Meanwhile, with interest rates heading south, JB Hi-Fi’s sales could be boosted to allow it to maintain the strong dividend growth that has contributed to its present yield of 4.5%.

Peter Stephens does not own shares in JB Hi-Fi.

Christopher Georges: Shine Corporate Ltd (ASX: SHJ)

The share price of the legal firm has fallen by more than 30% since reaching a record high in April, despite the only announcement the company releasing in that time being in regards to a favourable tax ruling. It seems as though the well-publicised issues surrounding fellow legal firm Slater & Gordon have negatively impacted the share price of Shine, despite the fact there is no association between the two companies. The shares trade on a multiple of just 13.5x and the company remains on track to deliver strong earnings growth.

Motley Fool contributor Christopher Georges owns shares in Shine Corporate Ltd

Regan Pearson: Orion Health Group Ltd (ASX: OHE)

On the back of my recent piece on the US$7 trillion dollar healthcare industry, my top pick for August is Orion Health. The company provides direct exposure to the rapidly evolving healthcare IT sector and has won contracts around the world to optimise health system information flows. These systems save hospitals and governments hundreds of thousands of dollars annually.

Orion is in the early phases of growth as it shifts revenues from a licence model to subscription revenues. Orion expects negative cashflows over the short term, but has the expertise and cash to drive growth.

Motley Fool contributor Regan Pearson does not own shares in Orion Health Corp.

Ry Padarath: Kip McGrath Education Centres Limited (ASX: KME)

Kip McGrath is an education stock progressing through a strategy shift that should see profits climb significantly this reporting season. Previously, franchisees who ran Kip McGrath tutoring centres were charged a flat annual fee. The new strategy sees franchisees paying 20% of their tutoring revenue to Kip Mcgrath in exchange for value added support and exclusive rights to a franchise area.

The company has 650 centres in 20 countries, is a strong cash generator, operates in a defensive industry and has plenty of room to grow without requiring significant investment.

Motley Fool contributor Ry Padarath owns shares in Kip McGrath Education Centres

Tom Richardson: Westfield Corp Ltd (ASX: WFD)

This business offers defensively-minded Australian investors overseas exposure and the tailwind of an appreciating US dollar in the year ahead as dividends are exchanged from US dollars before payment to shareholders. Growth should come from its pipeline of giant development projects including the flagship Westfield World Trade Centre due to open later this year. Selling for $10.01 it offers an attractive mix of value, growth and yield and I wouldn’t bet against it generating market-beating wealth for shareholders over the long term.

Motley Fool contributor Tom Richardson owns shares in Westfield Corp.

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*Returns as of January 12th 2022

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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