Top 5 UK Stocks To Buy In October 2024

These 5 stocks are our top Pro Picks for this month, taken from FTSE 250-listed companies that have garnered high InvestingPro health ratings (benchmarked against more than 100 financial factors and indicators from companies in the same sector), as well as from among those trading well under our proprietary fair value estimates (based on 5 overlaid investing models) and analyst assessments.

All of these names have earned InvestingPro health scores of well above 3.00, which for the last 7 years has indicated outperformance vs. the FTSE 250. A score this high points to a mix of first-rate financials: excellent earnings, cash flow, and growth vs. peers in its sector.

Importantly, all of these stocks are also currently undervalued per InvestingPro’s fair value calculations and favoured by Wall Street analysts polled by InvestingPro. They’re also sitting with a current potential upside of more than 20%. So if you’re eager to bulk up your portfolio, these overlooked powerhouse plays are all worth serious consideration.

• InvestingPro health score: 3.29 / 5.00
• InvestingPro average fair value: £32.11 / 55.8% upside
• Fair value confidence: Medium
• Industry: Capital markets

Herald Investment Trust (HRI), a prominent player in the investment trust sector, is one of our top stock picks for October 2024. As of the latest quarter, HRI boasts a market capitalisation of approximately £1.08 billion, making it a significant contender in the UK market.

HRI primarily focuses on investments in smaller quoted companies in the areas of technology, media, and telecommunications. Its goal is to achieve capital appreciation rather than income generation, which is evident as it does not currently distribute dividends to its shareholders. The current Price-to-Earnings (P/E) ratio stands at a commendable 5.7 indicating potential undervaluation relative to its earnings.

Interestingly, HRI carries a very modest level of debt, a factor that contributes to its financial stability and ability to manoeuvre through volatile market conditions with a lower risk profile. This investment trust has demonstrated a strong track record of delivering substantial returns over the long term, although it can exhibit higher volatility given its focus on smaller, growth-oriented companies.

Overall, Herald Investment Trust presents an interesting opportunity for growth-focused investors aiming for long-term capital appreciation.

• InvestingPro health score: 3.16 / 5.00
• InvestingPro average fair value: £32.17 / 8.2% upside
• Fair value confidence: Medium
• Industry: Industrials / Construction & Engineering

Morgan Sindall Group (MGNS), a leading UK-based construction and regeneration company, stands out as one of the top stock picks for October 2024. As of the latest quarter, Morgan Sindall has a market capitalisation of approximately £1.38 billion, positioning it as a notable player within the construction and infrastructure sectors.

The company currently boasts an appealing P/E ratio of 11.1, signalling potential undervaluation in comparison to sector peers. Morgan Sindall has managed its financials prudently, maintaining a manageable level of debt, which aids in ensuring operational flexibility and stability. This is particularly vital in the highly cyclical construction industry.

For income-seeking investors, Morgan Sindall offers a compelling dividend yield of 4.1%, reflecting its solid commitment to returning value to shareholders. Analysts have identified a potential upside of almost 8%, supported by the company’s robust order book and strategic focus on sectors such as regeneration, affordable housing, and public infrastructure projects, which are anticipated to grow in demand.

Investors seeking a balanced mix of capital appreciation and dividend income, combined with exposure to the UK’s infrastructure and construction boom, will find Morgan Sindall Group an interesting addition to their portfolios.

• InvestingPro health score: 3.49 / 5.00
• InvestingPro average fair value: £54.71 / 8.7% upside
• Fair value confidence: High
• Industry: Media

4imprint Group (FOUR), a leading marketer of promotional products, is gaining traction as a top stock pick for October 2024. As of the latest quarter, the company boasts a market capitalisation of approximately £1.37 billion, underscoring its strong position in the marketing and advertising sector.

The P/E ratio stands at a solid 16.4, suggesting an attractive valuation given the company’s consistent earnings growth. With a low debt level, 4imprint Group maintains a robust financial health that mitigates risks associated with leverage. This positions the company well to capitalise on emerging opportunities within its industry.

For investors seeking income, 4imprint offers a notable dividend yield of around 3.7%, reflecting its commitment to shareholder returns. This dividend provides a reliable income stream, which is particularly appealing in the current market environment. Analysts have identified a potential upside for the stock of 8.5%, bolstered by the firm’s strong performance metrics and strategic initiatives aimed at expanding its market reach.

Overall, 4imprint Group’s sound financial metrics, consistent dividend, and promising growth prospects make it an attractive opportunity for both conservative and growth-oriented investors.

• InvestingPro health score: 3.21 / 5.00
• InvestingPro average fair value: £29.28 / 27.3% upside
• Fair value confidence: High
• Industry: Consumer Staples / Food Products

Associated British Foods (ABF), a diversified international food, ingredients, and retail group, stands out as one of the top stock picks for October 2024. As of the latest quarter, ABF has a market capitalisation of approximately £16.87 billion, cementing its prominent position in the consumer goods sector.

The company sports a Price-to-Earnings (P/E) ratio of 14.3, suggesting that it is trading at a reasonable valuation given its stable earnings growth. ABF has maintained a prudent approach to debt, with a modest level that ensures financial stability and operational flexibility. This strategy is particularly advantageous given the volatile nature of the global markets.

Income-seeking investors will be pleased to note that ABF offers a competitive dividend yield of around 2.4%, demonstrating its commitment to delivering shareholder returns. Analysts see potential upside in the stock, driven by the company’s diversified business model, including its resilient food and ingredients divisions and the ever-popular Primark retail chain.

While the stock does exhibit some volatility, ABF’s diversified revenue streams, robust financial health, and strategic growth initiatives provide a solid foundation for long-term performance. Investors looking to balance growth and income in their portfolios should find ABF an intriguing option.

• InvestingPro health score: 3.53 / 5.00
• InvestingPro average fair value: £41.94 / 24.6% upside
• Fair value confidence: Low
• Industry: Financials / Capital Markets

3i Group (III), a prominent British multinational private equity and venture capital firm, is emerging as a top stock pick for October 2024. As of the latest quarter, 3i Group boasts a market capitalisation of approximately £31.79 billion, marking it as a heavyweight in the financial services sector.

The company’s Price-to-Earnings (P/E) ratio currently stands at a robust 8.3, indicating that it may be undervalued compared to its earnings. 3i Group maintains a prudent level of debt, which ensures financial stability and provides flexibility for future investment opportunities. This disciplined approach to leverage is crucial, especially in the volatile financial markets.

For income-focused investors, 3i Group offers a compelling dividend yield of around 1.9%, affirming its commitment to returning value to shareholders. Analysts foresee potential upside for the stock of almost 25%, buoyed by the firm’s diverse investment portfolio that spans various industries, including healthcare, consumer goods, and business services. This diversification strategy not only mitigates risk but also positions the company for sustained growth.

3i Group’s consistent track record of strong financial performance and strategic investments make it a compelling choice for investors. Its solid market fundamentals and growth prospects offer a balanced mix of income and capital appreciation.

If you’re looking for more great opportunities, here is a list of our top stock picks for previous months.