Top stock picks for February

Westfield Corp Ltd (ASX:WFD), SKYCITY Entertainment Group Ltd (ASX:SKC) and Catapult Group International Ltd (ASX:CAT) are among February’s top picks from the Foolish writers.

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We asked our Foolish writers to pick some of their favourite shares to buy in the month of February.

Rachit Dudhwala: Ardent Leisure Group (ASX: AAD)

Shares in entertainment, leisure and theme park operator Ardent Leisure Group continue to come under pressure following new concerns over earnings at its Main Event Entertainment business. Main Event is one of the leading bowling entertainment offerings in the U.S., however its focus on the oil-based state of Texas has led investors to fear that weakened consumer sentiment (due to the oil slump) will place a drag on earnings. This is despite the company announcing robust revenue growth in the first quarter of 2016. With the stock currently trading on an undemanding multiple of 15 times forecast earnings and offering a trailing yield of 6.5% at current prices, Ardent Leisure remains a solid investment proposition for the long term.

Motley Fool contributor Rachit Dudhwala owns shares in Ardent Leisure Group. 

Christopher Georges: Macquarie Group Ltd (ASX: MQG)

Short-term market volatility has hit Macquarie shares hard with the share price falling by more than 13% since the start of 2016. I believe this has presented an excellent buying opportunity for long-term investors who will benefit from the company’s growing exposure to overseas markets and annuity style businesses. Investors will also receive a dividend yield of around 5% and this is expected to increase by around 10% over the next two years. The shares are trading at a discount to the broader market and patient investors should look to build a long-term position in Macquarie at current prices.

Motley Fool contributor Christopher Georges owns shares in Macquarie Group.

Ry Padarath: CogState Limited (ASX: CGS)

The beginning of the year is a good time to review stocks to find those that have laid the building blocks to outperform over a full year. CogState is one example.

CogState provides 16 of the largest 25 pharmaceutical companies in the world with access to software that measures mental cognition in trial patients.

This is essential as it allows companies to accurately measure the success of potentially multi-billion dollar drugs for Alzheimer’s or dementia during the trial phases. CogState announced several large new contract wins to close out 2015 and has positive momentum leading into 2016.

Motley Fool contributor Ry Padarath has no financial interest in CogState Limited.

Tim McArthur: QBE Insurance Group Ltd (ASX: QBE)

Although QBE Insurance could be described as a blue chip company given it has a market capitalisation nearly $15 billion and is Australia’s largest global property and casualty insurer, the inherent riskiness of its operating businesses and the difficulty most investors would have accurately analysing the group’s complex business operations means this isn’t a stock for everyone.

That being said, at the current price level around $11, QBE does look attractive. Reporting on a calendar year basis, earnings per share (EPS) of 83 cents per share (cps) have been forecast by one analyst consensus for 2015. Looking forward into the current 2016 period and EPS are expected to rise to 104 cps; that implies a price-to-earnings multiple of just 10.6 times.

Motley Fool contributor Tim McArthur has no financial interest in QBE Insurance Group.

Owen Raszkiewicz: iShares Core S&P 500 ETF (ASX: IVV)

This Exchange Traded Fund (ETF) tracks the market price and dividend yield performance of US large-cap shares. The ETF has performed very well in recent years, rising 20.48% per year over five years. While I wouldn’t bank on a return of that magnitude in the next five years, I think this ETF offers local investors a simple way to diversify investments and position their portfolios to benefit from the ongoing growth of global giants like Apple Inc (accounting for 3.15% of the ETF’s holdings), Microsoft (2.47%), Exxon (1.89%), Johnson & Johnson (1.71%) and many others. All this for a management fee of just 0.07% per year.

Motley Fool writer/analyst Owen Raszkiewicz does not have a financial interest in the ETF mentioned above. 

Ryan Newman: Catapult Group International Ltd (ASX: CAT)

Shares of Catapult Group have soared over the last 12 months, but could still make a great long-term investment. The company provides wearable technology to sports teams and athletes around the world, allowing them to track progress and assess the risk of injury.

It recently reported its performance for the December 2015 quarter, announcing record sales results and a growing rate of subscriptions. The company’s products have also received some fantastic reviews from teams such as the Golden State Warriors (NBA) and the Indianapolis Colts (NFL), while the shares offer investors diversification through its international revenue streams.

Motley Fool writer/analyst Ryan Newman does not own shares of Catapult Group.

Mike King: Retail Food Group Limited (ASX: RFG)

Shares in Retail Food Group have virtually halved since a year ago. The company booked an $18.5 million writedown last financial year and share price performance suggests more writedowns could be coming. The franchise operator owns a multitude of franchises including Gloria Jean’s, Donut King, Pizza Capers, Crust Gourmet Pizza, Michel’s Patisserie, bb’s café, and Brumby’s Bakery to name but a few, with more than 2,500 outlets in its stable and 250 new stores to be opened in 2016. As a result, underlying net profit is expected to rise 25% for the first half of 2016, writedowns or not. You can also add a solid 5.1% fully franked dividend to that.

Motley Fool writer/analyst Mike King has no financial interest in Retail Food Group.

Tom Richardson: SKYCITY Entertainment Group Limited-Ord (ASX: SKC)

SkyCity Entertainment operates the SkyCity casino, hotel and hospitality complex in Auckland and other casinos in Queenstown and Adelaide among other tourism centres. It enjoys a powerful tailwind via the growth in tourism to ANZ as both nations continue to receive fast-growing numbers of casino-frequenting tourists from Asia. Just small uplifts in tourist numbers can contribute to big uplifts in this group’s bottom line over time, especially at its flagship Auckland asset that enjoys a moat and competitive advantages.

The valuation is reasonable as it trades on around 16x analysts’ estimates for forward earnings per share when selling for $4.20. SkyCity also has an estimated forward dividend yield in the region of 4.8% this financial year. I expect it might provide strong total returns in the years ahead.

Motley Fool writer/analyst Tom Richardson has no financial interest in SkyCity shares.

James Mickleboro: Westfield Corp Ltd (ASX: WFD)

On February 24 Westfield is expected to announce its full-year earnings. I believe the weaker Australian dollar could provide it with bumper earnings thanks to the fact that all of its revenue derives from overseas. On top of this, occupancy levels were a strong 95% in the half-year result, setting the company up for a great second half. The shares are trading over 5.5% lower than their November high, and following an upgrade to a consensus Strong Buy on CommSec last week, I feel February could be the month in which they reverse these declines.

Motley Fool contributor James Mickleboro has no financial interest  in Westfield Corp Ltd.

Andrew Mudie: QBE Insurance Group Ltd (ASX: QBE)

I continue to believe that QBE insurance remains one of the few ASX blue chips with significant upside remaining. QBE’s share price ended recently at $10.88, just 5% shy of its 12-month low of $10.36 touched almost exactly 12 months ago. Many analysts see upside of more than 50% from here based on earnings growth of over 60% between the 2014 and 2016 financial years. For investors that means earnings per share growth of 32% in the 12 months to 31 December 2015 and a further 21% in the 21 months to 31 December 2016. At today’s price QBE is forecast to yield a dividend of 6.5% fully franked, or 9.3% grossed up. It looks like a bargain as long as it’s not too impacted by the recent storms in the US and fires in Australia.

Motley Fool contributor Andrew Mudie owns shares in QBE Insurance. 

Sean O’Neill: Retail Food Group Limited (ASX: RFG)

I identified Retail Food Group (“RFG”) as my top stock back in October and continue to believe the company is both undervalued and a solid growth investment at today’s prices. Although RFG shares have risen some 10% since October’s pick, the company is still great value as a result of its modest price, great growth outlook, and 5.2%, fully-franked dividend. Over the medium term, growth internationally (including in China, a key new target market for RFG’s Gloria Jean’s franchise) should stand shareholders in good stead while the company’s growing scale should also result in cost savings and/or higher margins.

Motley Fool contributor Sean O’Neill owns shares in Retail Food Group Limited.

John Hopkins:  Woolworths Limited (ASX: WOW)

Woolworths finally cut the cord on its Masters business in what will prove to be a very smart long term decision for the company. Obviously, we can expect significant write downs in 1H16, but if you can see past the short term, it’s important to remember that Woolworths’ operating margins are the highest in the sector, driving cash generation which funds expansion and acquisitions while allowing management to entertain capital management initiatives. Woolworths is cheap right now, selling at a P/E of 12.5* compared to the industry average of 19.5. It has a dividend yield of 5%*, and return on equity of 22.7%*. (*Source Commsec).

Motley Fool contributor John Hopkins has no financial interest in Woolworths.

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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