Right now, I think there are two worth looking at.

Bodycote

Bodycote‘s (LSE:BOY) one of those businesses that doesn’t get much airtime. It provides heat treatment and thermal processing services to manufacturers across aerospace, automotive and industrial markets. Essentially this is includes hardening and strengthening metal components for customers who have no practical alternative but to outsource.

The income case is straightforward. The company offers a forward dividend yield of 4%. The payouts have been growing at a compound annual rate of around 3% over recent years. Importantly, cover’s improving to above two times next year as earnings recover.

But the growth angle is what makes it interesting right now. Forward earnings per share are forecast to jump over 70% in 2026 following a difficult 2025, leaving the stock trading on just 12 times forward earnings. In 2027, growth normalises at around 13.7%, but that still looks good on an earnings/growth-adjusted basis.

The analyst consensus target sits 38% above the current price, with nine brokers covering the stock. Down 24% from its 52-week high, the sell-off looks overdone relative to the earnings recovery now underway.

Risks? Well, revenue growth has been a bit slow despite earnings recovering. Investors will want to see organic revenue growth restored or the share price revival may never come.

Morgan Advanced Materials

Morgan‘s (LSE:MGAM) in the middle of a genuine transformation. The company makes advanced carbon and ceramic materials and has been simplifying its portfolio after years of operating too many businesses at once.

And it looks like the transformation isn’t over yet, with the company reviewing a potential sale of the Thermal Products division. This is the firm’s laggard from a margin perspective, but it represents a good proportion of revenue.

If a sale goes ahead, Morgan’s left with two higher-margin units in Performance Carbon and Technical Ceramics. Collectively, they’re running at blended margins above 12%. That’s a meaningfully better business than the market’s currently pricing.

The income credentials here are arguably even stronger than Bodycote. It offers a forward yield of 5.7%, with EPS forecast to grow 25% in 2026 and a further 18% in 2027. The stock trades on 10.9 times forward earnings, falling to 9.6 times the year after.

There are, of course, risks here too. Dividend coverage at 1.55 times for 2026 looks a bit weak. Net debt at £234m is also worth watching.

In short, neither of these companies are without blemishes. But as income stocks with a credible growth story behind them, both deserve serious consideration at current prices.

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Our monthly Ice ‘Best Buys Now‘ are designed to highlight our team’s three favourite, most timely Buys from our growing list of income-focused Icerecommendations, to help investors build out their portfolios.

Here are the latest three picks from our team of experts.

• Morgan Advanced Materials is starting to look like a higher-quality business, with the company offloading assets as part of a business simplification programme.
• The company now trades at 10.9x forward earnings (rolling 12 months), with that figure forecast to fall to 9.6x in 2027. Taking account of the improving balance sheet and 6.5% dividend yield, the stock appears to be trading at multi-year lows based on this adjusted metric.
• Free cash flow improved significantly in 2025, following a reduction in capital expenditure and a reduction in the scope of its investments in the Semiconductor business.
• The stock now trades around 13% below its 50-day moving average after the business reported lower profits and margins in 2025. However, the long-term picture remains intact with a clearer strategic direction.
• The company is considering the sale of its Thermal Products division, which could generate cash to reduce debt and would leave the business with two higher-margin units (Performance Carbon and Technical Ceramics).
• While it’s never good to assume that an asset will be disposed of, the business would appear much stronger without its Thermal Products division. With the remaining businesses offering a blended margin above 12%, the group could command higher margins.

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However, the last few years haven’t been straightforward. In fact, the stock is trading near 10-year lows. Morgan has struggled recently due to weak end-market demand, particularly in semiconductor and industrial sectors, along with adverse sales mix and foreign exchange challenges. 

Efficiency is key

Morgan is expanding a restructuring programme that reduces manufacturing sites and improves efficiency. In fact, the number of sites it operates have fallen from 85 in 2016 to around 60 in 2025. These changes are delivering significant annual cost savings and enhanced operating profit benefits.

The company is also investing heavily in capital projects, particularly expanding capacity in high-growth areas like semiconductors, healthcare, and clean transportation, while maintaining flexibility to adjust spending based on market demand.

Additionally, Morgan is focusing on digital infrastructure upgrades and a leaner management structure to support operational agility and customer proximity, positioning itself for long-term growth despite current market uncertainties.

The valuation proposition

Morgan warned in August that full-year adjusted operating profit would likely come in at the bottom of market expectations, citing the challenges mentioned above and continued soft demand.

In the six months to 30 June, adjusted operating profit dropped to £58m from £71.3m a year earlier, while revenue declined 8.7% to £522.6m. Clearly, not good. Trading conditions stayed difficult across its industrial end-markets, with lower orders in Europe and China and slowing growth in the US.

The forward valuation is constantly changing given shifting forecasts and movements in the share price. The shares are now trading with a forward price-to-earnings (P/E) ratio of 16.4 times. Given expected earnings growth in the medium term, this figure should fall to 9.1 times by 2027 — that’s based on earnings forecasts and today’s share price.

Net debt, however, is forecast to remain considerable relative to its equity, peaking at £284m in 2025 before edging lower in subsequent years. For context, its market cap has fallen below £600m, and has come close to the lowest capitalised companies on the FTSE 250 index. Servicing this debt could well be the biggest risk to consider when investing in Morgan.

The bottom line

Ultimately, I’m a big fan of industrial companies that have an economic moat and pricing power. But the problem is the mix. A chunk of revenue still comes from cyclical industrial markets — steel, automotive, energy — where volumes are under pressure and customers push back hard on price rises.

The latest results, however, suggest the transition towards higher-margin and less cyclical industries hasn’t had an impact yet. But it’s early days, and there are plenty of other UK success stories.

Rolls-Royce’s successful efficiency drive and transition saw the stock increase in value by 14 fold. Melrose Industries and Bodycote are also seeing positive share price action as they undergo their own transition programmes.

All considered, I believe it’s worth considering. Debt may hinder some progress, but the company has potential.

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Despite this, the stock looks like great value. Currently, the stock trades at 7.5 times earnings, and 10 times forward earnings. This is a big discount versus the international industrials sector.

So let’s take a closer look at FTSE 250 stock.

What it does

Morgan Advanced Materials is a maker of specialist products that use carbon, advanced ceramics and composites. Its products find applications in various industries, including aerospace, defence, energy, healthcare, electronics, and industrial sectors. Those products are designed for demanding environments and provide critical functionalities in a series of future-proof industries.

A slower year, but better medium term

MGAM revised its guidance for 2023 down following the cyber attack. The company now expects revenue to be between £1.65bn and £1.75bn, from £1.75bn-£1.85bn previously. Profit before tax is also expected to range £120m-£130m, down from £130m-£140m previously.

“As previously announced, the cyber event we experienced at the start of the year has impacted sales, profitability and cash in the short term,” chief executive officer Pete Raby said in the H1 report.

Adjusted earnings per share fell 37.7% to 9.9p during the first half. But the FY guidance reflects revenue growth of 2-4%.

The compressed margins during the period aren’t expected to be sustained, with Barclays forecasting EBITDA margin to “to mid-teens and a new peak“.

Additionally, it’s worth noting that prominent clients of Morgan Advanced Materials, such as Airbus, Siemens energy, and Rolls-Royce, are currently benefiting from favourable market trends. This further contributes to the firm’s potential for an improved financial performance.

My belief is further supported by the firm’s position in end-user markets with high potential and price insensivity.

Valuation

As noted, Morgan Advanced Materials trades at 7.5 times earnings. This puts it at a significant discount to the FTSE 250 and its sector. Industrials have an average price-to-earnings (P/E) of 20.2, meaning Morgan Advanced Materials has a 38.6% discount. Here’s how the FTSE 250 stock compares to US firm Hexcel Corporation on TTM non-adjusted P/E.

The chart shows us it trades at a sizeable discount to its US advanced materials peer. We can also see this discount when using the EV-to-EBITDA ratio.

So what’s the upside?

Of course, like any investment opportunities, there are limits. Investors will be concerned to see net debt doubling, up by 100.5% to £257.7m over the first half. This in part is due to speed up investment in IT infrastructure after the cyber attack.

However, this is particularly enticing investment opportunity — I’ve added it to my own portfolio. Notably, Barclays has established price target of 365p — a 35% upside. However, it’s worth recognising that various analysts see the potential for even more upside.

This outlook stems from the company’s entrenched presence in burgeoning markets and its role in delivering specialised products tailored to industry-specific demands.

I think this compelling positioning and its ability to capitalise on evolving market dynamics makes the investment very attractive.

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Morgan Advanced Materials (LSE: MGAM) released a positive trading update on 4 November. And I’ve identified it as one of two stocks to buy for my portfolio. However, right now I have no spare cash but plan to revisit both these opportunities soon.

Morgan makes “technologically demanding” products from carbon and ceramic materials. For example, firebricks, heat shields, carbon brushes, terminal blocks, ceramic cores, crucibles, seals, bearings and many other things. And, in the nine months to 30 September, organic sales rose by almost 11% year-on-year as measured in constant currency rates. 

Trading ahead of expectations

Looking ahead, the directors raised their guidance for full-year organic constant-currency revenue and for adjusted operating profit. And City analysts have pencilled in an uplift in earnings of almost 20% for the year.

Chief executive Pete Raby said the company is delivering “robust” revenue growth and improving profitability “despite the challenging environment.” And the effects of inflation are being “more than offset” by improving operations and by adjusting selling prices.

Meanwhile, with the share price near 302p, the valuation looks undemanding. The forward-looking earnings multiple is below 10 for 2023 and the dividend yield is well above 3%.

However, the company has a patchy multi-year record of revenue and earnings. And the dividend anticipated for 2023 is still a little below what the company paid in 2016. So I reckon the business has a history of struggling to maintain a positive growth trajectory. And that’s probably because the operations are vulnerable to cyclical influences affecting the wider economy.

Nevertheless, despite the risks, I’m tempted to buy the stock to hold for the long term. But I’m also keen on another company operating in the industrial sector, Bodycote (LSE: BOY). 

This business provides services in the areas of heat treatment, metal joining, surface technology and hot isostatic processing. And its customers include enterprises in general industry and sectors such as aerospace, defence, and automotive.  

Beating inflationary pressures

A trading update released on 18 November declared “strong” revenue growth on track to meet expectations. The report covers the period from 1 July to 31 October, and it shows revenue at constant currency rates increased by 22% year-on-year. 

However, the figure includes selling price increases and energy surcharges charged to customers of around 15%. But I think the way the firm has passed on its costs is encouraging and shows the resilience of the business in the current inflationary economic environment.

City analysts expect a double-digit percentage increase in earnings during 2023. And with the share price around the 590p level, the forward-looking dividend yield is running just below 4% for 2023. 

But Bodycote has a robust multi-year record of raising its dividend by annual increments — even through the pandemic. And I think the firm’s financial history underlines the strength of the business.

However, despite my enthusiasm for the business, the stock has travelled essentially sideways over the past decade. And part of the reason for the lacklustre performance could be patchy earnings and a cycling valuation.

Nevertheless, the company tempts me now.  

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In the past, I focused on picking companies that offer the highest dividend. I thought this was the only way to build a good income portfolio. However, on further consideration, I’ve found that the most important factor is a high level of forecast dividend growth. This will help to amplify the compounding impact of dividends and steadily increase the passive income from these investments. 

For this reason, I’ve decided to consider a new approach to income investing. I now look at companies that have paid and grown their dividends for many years. These companies may only offer a yield of 2%-3% in the current year. However, the goal of this approach is for this dividend yield to increase gradually over the duration of my investment.

New opportunity

A company on my list is Morgan Advanced Materials (LSE: MGAM), a UK-based manufacturer of specialised materials. The share price has struggled over the last year, falling 32.2%. It is now down over 40% from its peak in 2021. Consequently, the price-to-earnings (P/E) ratio is now nine and is forecast to hit just 8.1 by next year.

However, the dividend yield, which is currently 3.7%, drew my attention to the company. This has been paid consistently for the last 17 years and has grown for the last two. In addition, the dividend is forecast to grow by almost 12%, hitting 4.2% for 2023. This is very encouraging, especially given the dividend cover ratio. The ratio is forecast to remain at 3, indicating this new yield can be comfortably covered by earnings per share (EPS).

Strong fundamentals

Morgan’s underlying fundamentals are strong, with good profit margins, efficient earnings generation from capital, and reasonably high cash conversion. Earnings forecasts are also encouraging, with turnover expected to grow by 7.6% and EPS by 11.3%. These are both considerably above the three-year average and help to demonstrate future dividend affordability.

But it’s important to note that the company’s debt levels are slightly higher than I typically like, at 32.2% of market capitalisation. This is further increased by the pension deficit hitting 14.8% of market capitalisation, which will put pressure on future dividend payments. Furthermore, the dividend was reduced in 2020, and although it has returned to growth, this could indicate that future dividend cuts could occur.

Nonetheless, I think that accessing such a consistent and growing dividend yield is a great opportunity. Therefore, I’m keen to add Morgan Advanced Materials to my 2023 portfolio once I get the necessary funds.

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I’ve been hunting for some of the best shares to buy now with £2,000. For example, I like the look of social housing energy services company Sureserve (LSE: SURE).

In May, its half-year results report had the headline: “Continued momentum, high revenue visibility and strong order book drives confident outlook for full year”.

High earnings visibility

The figures were impressive. Revenues, profits and the order book were all up by meaty double-digit percentages compared to a year earlier. Non-executive chairman Nick Winks said the business benefits from “high” visibility of revenue. And that’s because of its long-term local authority and housing association contracts.

Winks acknowledged that general economic headwinds exist affecting the company’s costs. But he was “confident” in the prospects of the business for the rest of the trading year to September. City analysts predict an uplift of almost 43% in earnings for 2022 and a further rise of nearly 8% in 2023.

Although any business can miss its estimates, the forward-looking earnings multiple is just below 10 for 2023. I think that’s undemanding. However, Sureserve doesn’t currently pay a shareholder dividend. But I like the way the company is building on previous earnings growth and expanding organically and via bolt-on acquisitions.

Profitable international expansion

I’m also keen on global luxury goods manufacturer, retailer and wholesaler Burberry (LSE: BRBY). In July’s first-quarter trading update, the company revealed that lockdowns in China had affected the results. Comparable store sales increased by just 1% year-on-year. However, excluding mainland China, comparable store sales grew by an encouraging 16%.

The directors said the macro-economic environment is causing some near-term uncertainty. However, the performance in China has improved since stores reopened in June. 

City analysts expect earnings to increase by almost 27% in the current trading year and by just over 4% the following year. Meanwhile, set against those expectations, the forward-looking earnings multiple is just below 15. That’s with the share price near 1,793p. And the anticipated dividend yield is above 3%. 

It’s possible for Burberry to run into operational setbacks ahead. But the company’s earnings are on an upward trajectory. And I’d buy some of the shares to hold for the long term as operational progress unfolds in the years ahead.

Growing markets 

My final pick is Morgan Advanced Materials (LSE: MGAM). The business manufactures specialist products using carbon, advanced ceramics and composites. And in July, the first-half results report revealed solid progress in revenue and adjusted earnings.

The directors said the full-year figures would likely come in at “the top end” of analysts’ previous forecasts. And chief executive Pete Raby said the “robust” revenue expansion arose because of growing markets and the firm’s strategy. However, he warned that there will likely be a “moderation” of growth rates in the second half because of challenges in the economy.

City analysts expect earnings to grow by just under 15% in 2022 and by almost 6% in 2023. Meanwhile, with the share price near 305p, the forward-looking earnings multiple is just below an undemanding 10 for 2023. However, that could work out higher if the company misses its estimates because of operational or trading difficulties.

Nevertheless, I’d take the chance with a long-term hold while collecting the dividend, which is yielding above 3%. 

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The Footsie has also been pulled upwards by commodity stocks. Meanwhile, the FTSE 250 contains stocks in several industries, such as the travel sector, which have performed poorly this year.

However, for me, it’s a good place to look for lesser-known stocks with huge potential.

So, here are two stocks I’d buy for my portfolio and hold for five years.

Morgan Advanced Materials

At 252p, Morgan Advanced Materials (LSE:MGAM) is trading at a 52-week low. The Windsor-based company manufactures specialist products, using carbon, advanced ceramics and composites.

However, the falling share price belies positive signs from the firm.

In Q1, revenue increased 10.9% on an organic constant currency basis, compared to the same period last year. 

In May, Morgan Advanced Materials reaffirmed its guidance for full-year organic revenue growth of 4% to 7% in 2022. 

“We will see higher inflation in 2022 and expect higher pricing and continuous improvement to offset this,” it said. The group suggested its margins will actually expand further during the year.

I think long-term prospects are good too. The renewables sector is a key market for the company, with its products used in both wind turbines and solar panels. This is a multi-trillion dollar market that will continue to grow in line with net-zero agendas.

The company currently has a price-to-earnings (P/E) ratio of 11, and the forward P/E is even more attractive at 9.8. It’s also got a dividend yield of 3.6%.

But I’d buy this stock for the long-term growth potential, particularly as global infrastructure spending picks up in the coming years.

One concern is the effect of inflation on costs, but the company appears confident that increasing its prices won’t impact demand.

Chemring Group

Shares in Chemring Group (LSE:CHG) soared after Russia’s invasion of Ukraine, reaching pre-pandemic levels.

The business provides a range of advanced technology products and services to the aerospace, defence and security markets. 

In June, Chemring posted a rise in interim profit and revenue, increased its dividend, and backed its expectations for 2022.

In the six months to April 30, underlying pre-tax profit rose 22% to £33.1m and revenue rose 11% to £220.4m.

The dividend was lifted 19% to 1.9p a share.

It also said that around 85% of expected H2 revenue was in the order book in April, or has already been delivered.

However, I’d buy Chemring stock because of a trend towards increased defence spending around the world, in addition to the immediate increases we’re seeing now because of Russia’s invasion of Ukraine.

There are of course some risks and issues. For one, contract agreements with the US Department of Defense have been delayed and will hopefully come in towards the end of the year. It’s also worth noting that the dividend yield of around 2%, isn’t that attractive.

The post 2 high-potential FTSE 250 stocks to buy and hold for 5 years! appeared first on The Twelfth Magpie.

I reckon the FTSE 250 is a great place to go hunting for future winners. But the index has cooled over the last year, falling 11%. I reckon this fall has created some possible bargains. Here are three cheap growth stocks I’m considering for my portfolio.

Super quality, fair price

Investment platform AJ Bell (LSE: AJB) benefited strongly from the pandemic trading boom. Pre-tax profit rose from £37.7m in 2019 to £55.1m in 2021.

However, stock markets have calmed down as life has returned to normal. Broker forecasts for this year suggest profits could fall by around 5%.

AJ Bell’s share price has fallen by more than 40% over the last year as investors have turned cautious. I think this could be a chance for me to pick up a quality business cheap.

After all, this year’s slowdown is only expected to be a one-off blip. Forecasts suggest that earnings will rise by 15% next year and again in 2023/24.

Today, I can buy AJ Bell shares at a price of 25 times forecast earnings, with a 2.7% dividend yield. For a business with a 38% operating margin and decent growth potential, I think this looks very reasonable.

A classic fashion brand

Demand for the distinctive boots made by Dr Martens (LSE: DOCS) is stronger than ever. Sales rose by 15% to £773m last year. This number is expected to have hit £908m during the year ended 31 March.

City analysts expect Dr Martens earnings to keep rising over the next two years. But stock market investors seem to disagree. The stock has fallen by 55% over the last year.

One problem has been that the company has warned of supply chain problems hitting US shipments. Rising costs have also forced Dr Martens to raise its prices, which could hit consumer demand.

We’re still waiting for full-year figures to 31 March, but I think the company would already have issued a profit warning if earnings were going to be much lower than expected.

DOCS shares are now trading on just 11 times 2022/23 forecast earnings. That looks cheap to me for such a classic brand. I’m definitely interested.

A 166-year-old growth stock!

Morgan Advanced Materials (LSE: MGAM) can trace its roots back to 1856, when the Morgan brothers started making crucibles at their factory in London.

Today the company makes a much wider range of industrial ceramics and other parts. One key market today is renewable energy. The company’s products are used in both wind turbines and solar panels.

Industrial concerns like this one can suffer during recessions. Rising costs are also a challenge, but CEO Peter Raby recently said that the company expected to be able to increase prices to match inflation.

Morgan Advanced Materials is below the radar for many investors, but analysts expect earnings to rise by 10% this year. Despite this confident outlook, the shares trade on less than 10 times forecast earnings. That seems cheap to me, especially as there’s also a useful 3.4% dividend yield.

I’ve recently added Morgan Advanced Materials to my portfolio, as I think the stock could outperform from current levels.

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Christopher Ruane: Lookers

Second-hand car sales dealerships aren’t always the best place to look for a bargain. But I think things could be different at Lookers (LSE: LOOK), which sells used and new vehicles.

Several directors have added to their holdings in December. The chief executive spent £29,000 doubling his own position. I think such confidence may be merited. The Lookers share price has been treading water even though third-quarter results beat expectations. Supply issues could hurt new car sales, though, threatening revenues.

Christopher Ruane does not own shares in Lookers.

Rupert Hargreaves: Next

My top share for January is the retailer Next (LSE: NXT). I would buy this stock for my portfolio as it is a retail champion. It has consistently outperformed the rest of the UK retail industry and its own expectations in the past, and the firm is not slowing down.

Management is investing heavily to maintain the group’s growth rate. As the UK economy continues to recover, I think Next could prosper. Risks that could hold back growth include wage inflation and the supply chain crisis.

Rupert Hargreaves does not own shares in Next.

Niki Jerath: Reckitt

My stock pick for January 2022 is Reckitt (LSE: RKT). The share price is up over 2% in the past month. I could be wrong, but it might go higher.  

I expect demand for its consumer goods brands will rise over Christmas and into the New Year, no matter what happens over the festive period.  

Sales of cleaning brands such as Dettol are sure to rise in reaction to the unfortunate outbreak of the Omicron Covid variant.  

I’m also confident that its other brands such as Strepsils and Nurofen will be useful in January as we nurse our New Year’s hangovers!  

Niki Jerath does not own shares in Reckitt.

Dylan Hood: Lloyds

My best share for January is Lloyds (LSE: LLOY). At the time of writing, Lloyds shares are trading at 46p. The stock has performed well for investors throughout 2021, delivering 33% year-to-date returns.

The main reason I like the look of Lloyds is because of its high growth plans under new chief, Charlie Nunn. The new strategy aims to vastly speed up growth in areas of the business such as property, wealth management, and commercial banking.

If this plan pays off, I think we could see some great growth in the Lloyds share price throughout January 2022 and beyond.

Dylan Hood does not own shares in Lloyds.

Stephen Bhasera: Liontrust Asset Management

Liontrust Asset Management (LSE:LIO) is arguably the best asset management company listed on the London Stock Exchange right now. The results speak for themselves as its share price has appreciated by 58% over the past year.

This company employs several strategies across multiple funds to produce superior returns for investors. With over £30bn in assets under management, its latest half-yearly results revealed revenues of £109m. Forecasts indicate that Liontrust’s growth will be slightly slower in 2022 than the past five years but it is still expected to drastically outperform competitors and so remains a solid pick.

Stephen Bhasera has no position in Liontrust.

Edward Sheldon: Hargreaves Lansdown

My top stock for January is Hargreaves Lansdown (LSE: HL), which operates the UK’s largest investment platform. It underperformed in 2021 and I think the share price weakness has created an attractive buying opportunity.  

There are several reasons I like HL. In the short term, the company looks set to benefit from higher interest rates. That’s because it earns income on its clients’ cash savings. Meanwhile, in the long run, it should benefit as equity markets continue to rise and more Britons save and invest for retirement. It’s worth noting that portfolio manager Nick Train believes that Hargreaves Lansdown represents “one of the greatest UK growth stock bargains over the next decade.”

There are risks to consider here, of course. One is competition from rivals such as AJ Bell (which just launched a new commission-free app) and Freetrade.

Overall, however, I think this FTSE 100 stock looks attractive right now.

Edward Sheldon owns shares in Hargreaves Lansdown.

Andy Ross: Staffline 

Shares in blue collar recruiter Staffline (LSE: STAF) have struggled for much of the last quarter of 2021, after hitting a high point in mid-September. On the flipside, that has made the valuation pretty compelling with a forward P/E ratio of 14. The EV to EBITDA ratio – another measure of valuation – is 7.77, which is low and indicates the shares are potentially undervalued.  

Staffline is a recovery share. It has new executives in place who are looking to build back better after a share price collapse in recent years, following poor leadership under previous management.  

Andy Ross owns shares in Staffline.

Zaven Boyrazian: Focusrite

Focusrite (LSE:TUNE) provides the music industry with bleeding-edge audio equipment and software. Under its numerous brands, the firm can cater to professionals and hobbyists alike.

The group definitely operates in a niche market with plenty of competitors targeting the same audience. However, thanks to some smart bolt-on acquisitions, and an impressive Net Promoter Score of 74, the company seems to be staying on top.

With double-digit revenue and earnings growth even with live events being delayed, Focusrite looks primed to deliver impressive returns, in my opinion.

Zaven Boyrazian does not own shares in Focusrite.

Paul Summers: Computacenter

I think there could be further upside to the Computacenter (LSE: CCC) share price in 2022. The company has thrived in recent years as corporate and public sector organisations have rushed to update their IT infrastructure. With no end to Covid-19 in sight, I can’t see this momentum slowing just yet.

Clearly, much depends on whether product supply shortages highlighted in October have worsened. We’ll find out in January’s trading update. At 18 times forecast earnings, however, Computacenter’s valuation doesn’t seem excessive given its consistently great returns on capital. There’s a secure 2.2% dividend yield too.

Paul Summers has no position in Computacenter

Roland Head: Morgan Advanced Materials

My top stock for January is Morgan Advanced Materials (LSE: MGAM). This British industrial firm has been making equipment for metal foundries and parts for electric motors (among other things) since the late 19th century.

Growing demand from electric transport and renewable energy is helping to drive new growth. Although there’s always the risk that an economic slump will hit demand, I believe Morgan’s long pedigree and market share should provide some protection for shareholders.

Recent management guidance is positive. I think the shares look good value on 12 times forecast earnings and would consider buying them for my portfolio.

Roland Head does not own shares in Morgan Advanced Materials.

G A Chester: British American Tobacco 

British American Tobacco (LSE: BATS) is a highly cash-generative business, and unhealthy products and regulatory risk aren’t deal-breakers for me. 

It’s my choice for  for January after its recent trading update. It’s making excellent progress on its £5bn revenue target for new category products. It’s also delivered £1bn cost savings one year ahead of plan. Lower debt gives it greater capital allocation flexibility going into 2022, and management said: “We recognise the clear value of a share buyback at the current valuation.” 

In addition to a running dividend yield of around 8%, I’m expecting the company to announce a buyback programme with its annual results on 11 February. 

G A Chester has no position in British American Tobacco.

Royston Wild: National Grid 

I think grabbing some defensive stodge could be a good idea for January. As I type, Covid-19 restrictions are being tightened Omicron infection rates balloon. It’s been suggested that full lockdowns could return after Christmas too. 

The economic implications of these measures for many UK shares could prove catastrophic. But the public health emergency isn’t something FTSE 100 stock National Grid doesn’t have to worry much about. It’ll be needed to keep Britain’s electricity network running regardless of how the pandemic is panning out. This is why I think it could be a top stock for today.

Oh, and at recent prices National Grid offers jumbo dividend yields just shy of 5% for the short-to-medium term. 

Royston Wild does not own shares in National Grid.

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