A frequently touted piece of investment advice is to “sell in May and go away, come back on St Leger Day”, arguing that there are little gains to the summer months and investors are better off staying out of the market until September.
However, those investing for the long term can probably disregard such ‘rules’ and stick with well-researched investments, rather than trading in and out of positions over a period of months. In fact, the summer months can be a good period for certain types of 
company.
Patrick Connolly, head of communications at Chase de Vere, said: “Unfortunately nobody can predict what will happen in the markets with any degree of confidence - if it was that easy, we’d all be incredibly rich.”
“‘Sell in May and go away, come back on St Leger Day’, for instance, suggests that investors would be better out of stock markets for four months of each year.”
“While it is true that markets can be more volatile in the summer months as they are moved by lower trading volumes, this doesn’t mean that investors should get out. The most sensible way to maximise returns in the long term is to stay invested and focus any decisions on your own circumstances, requirements and attitude to risk.”
In light of this and using the well-known adage as a springboard, The Share Centre’s Graham Spooner recommends five stock picks that investors should probably not sell out of just because it’s the summer.
Booker
The cash-and-carry giant is leading the way in terms of M&A – just last week, chief executive Charles Wilson announced the unexpected acquisition of Musgrave Retail Partners for £40m, subject to regulatory clearance.
The Irish food wholesaler, which comprises the Budgens and Londis businesses, will add approximately 1,800 stores to Booker’s existing portfolio of independent grocers, pubs, convenience stores and restaurants.
The market responded well to the news and the stock’s performance spiked last Thursday following Wilson’s announcement as investors marked the shares up by 12.04 per cent, according to data from FE Analytics.
Performance of stock vs index over 1month
Source: FE Analytics
Spooner said: “This £40m deal saw its share prices rise by more than 10 per cent, so current investors are encouraged to stay put as there may be more to come. The acquisition will add a significant number of stores to the group’s network. The highly regarded management have done an excellent job in a difficult trading environment and for reasons such as this, we recommend Booker as a ‘buy’ for medium-risk investors looking to grow their portfolio.”
Marston’s
Marston’s, a British public house operator and the world’s largest brewer of cask ale, said earlier this month that it will continue to add new pubs and restaurants and invest in its brewing operation, following an announcement that its underlying turnover has risen 3 per cent to £384.5m.
This growth is predicted to create 1,250 jobs across the UK, according to chief executive Ralph Findlay.
However, the market’s confidence in Marston’s hasn’t always been high – in late 2013, controversy was sparked when the company announced that it would sell approximately 200 pubs to New River Retail, an AIM-listed company which acquires high street properties across the UK.
Despite fears, the disposal generated cash which has since been used to grow the brand. Taking 2013 into account, Marston’s has since outperformed its FTSE 250 index by 12.61 per cent.
Performance of stock vs index over 3yrs
Source: FE Analytics
“As the owner of over 1,700 managed, leased and tenanted pubs across the UK, Marston’s is a group that may well benefit you over the summer months, especially if the sun shines,” Spooner added.
“It has the potential to be boosted by summer’s travel and leisure activity, with a knock-on effect for investors. Marston’s full year figures were in line with market expectations, whilst March saw the news of an acquisition of Daniel Thwaites’ beer division and an agreement to supply to Thwaites’ pubs.”
“We recommend Marston’s as a ‘buy’ for medium-risk investors looking to receive income and growth from their portfolios.”
EasyJet
EasyJet hasn’t had an easy time of it recently, as striking French air traffic controllers last month wiped millions off the budget airline’s profits after it was forced to cancel more than 600 flights.
What’s more, it was announced this week that the profits of direct competitor Ryanair have soared by two-thirds following a push to improve its customer service.
This unfortunate combination has arguably contributed to EasyJet’s poor performance since the start of the year, making losses of 0.86 per cent and underperforming Ryanair by 18.12 percentage points.
Performance of stocks in 2015
Source: FE Analytics
However, Spooner says the fact that shares are trading on a more attractive rating as a result of the price fall means investors should consider buying.
“As the summer months are fast approaching, travel and leisure companies are likely to receive higher levels of custom. As one of the largest low-cost airlines, EasyJet could be a beneficiary,” he explained.
“The company’s operating profit margin and return on capital have both doubled over the past four years. Investors should also note that the group’s prospective dividend yield has risen to over 3 per cent, which is one of the better in the sector. With flights to key cities throughout the summer and profits rising helped by allowing customers to allocate seating, we currently recommend EasyJet as a ‘buy’ for medium-risk investors wanting a balanced portfolio.
Compass
Spooner recommends buying Compass group, a company that offers cleaning, foodservice, property management and support services, as a holding that offers exposure to global markets.
“As the world’s largest contract caterer, Compass group has shown a strong performance over recent years,” he said.
“There has been good growth from its American operations, and returning growth in Europe and Japan. The group recently reported a 4.9 per cent increase in underlying profit and a 5.7 per cent rise in underlying revenue.”
Spooner believes that, because of the well-diversified range of large businesses that Compass owns, it is on track for a strong summer as we head into corporate entertainment season.
“Investors should also note that the interim dividend was raised 11 per cent to 9.8p. Due to good sales growth and rising profit margins, we currently recommend Compass as a ‘buy’ for investors with a balanced portfolio looking to take a lower level of risk.”
Over the last three years, Compass has more than doubled the performance of the FTSE 100 by 50.81 percentage points.
Performance of stock vs index over 3yrs
Source: FE Analytics
Restaurant Group
Restaurant Group is, as the name would suggest, a leading chain of restaurants and public houses, owning brands such as Garfunkel’s, Frankie & Benny’s and Chiquito.
Since the start of the year, the company has opened nine new sites and plans to open more than 40 restaurants throughout the year.
Spooner said: “With warm summer months hopefully approaching, pub lunches and family meals out could keep the tills ringing at Restaurant Group, which has operations in prime positions. As the operators of over 450 restaurants and pub restaurants, the group may benefit from those in summer holiday-mode, especially at airports.”
“Restaurant Group may well see growth over the next few months, especially as the demand in the UK could also be boosted by rising disposable incomes. For such reasons, we recommend the travel and leisure group as a ‘buy’ for investors looking to support a balanced portfolio and take a medium level of risk.”
The company trades at approximately 60 outlets in UK airports, shopping centres and other transport locations such as service stations.
The portfolio in general is diverse in terms of the hospitality experiences the firm offers, which span across counter service, table service, pubs, bars and even sandwich shops.
While Restaurant Group has underperformed the FTSE 250 since the start of the year, it has done well over the longer term, outperforming the index by more than double to achieve returns of 266.74 per cent over five years.
Performance of stock vs index over 5yrs
Source: FE Analytics
