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The UK stock market is brimming with hidden value. Here are some top picks to consider in July

Number three written on white chat bubble on blue background
Image source: Getty Images

The UK stock market is doing well this year but things have slowed down as the summer holidays approach. However, the following three companies don’t appear to be slowing down at all.

Wise

Wise (LSE: WISE) catapulted to fame about a decade ago after starting life as Transferwise, a service offering low-cost international money transfers. Foreign workers in the UK jumped at the opportunity to send money home at a fraction of typical high street bank fees. The company has since restructured itself into a fully-fledged online bank, offering savings accounts, debit cards, and business banking.

It released its 2024 full-year earnings earlier this month with revenue up 46% from last year and earnings per share (EPS) beating analyst expectations by 14%. Yet despite the positive results, the share price crashed 17% following the report.

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This was because management said it expects growth to slow in the coming year, down to 15%-20%. That’s quite a drop from the 31% growth it experienced this past year. However, that doesn’t mean the share price will necessarily suffer. Between July 2022 and July 2023, the share price increased by over 100%.

Could it repeat that performance again? It’s hard to say but the current price point makes it a stock worth considering.

Games Workshop

The Games Workshop (LSE: GAW) provides a unique service with very little competition and a loyal fanbase. It sells board games and miniature figurines for popular fantasy games like Warhammer 40,000.

The share price shot up 13% this week after the company posted a positive trading update. It expects a 20% rise in licensing income this year and 17% increase in pre-tax profits, plus 10% revenue growth. Those figures aren’t guaranteed, of course, but they seem to have caught the attention of investors.

In today’s increasingly online world, it’s surprising to me that such products are still so popular. But consumer habits could easily change and an economic downturn would threaten the company’s profits. Since it sells expensive premium products, customers are unlikely to prioritise them if money is tight.

Another concern is the share price. It’s now quite high so further growth this year could be limited. But with a highly devoted fanbase and strong potential in it’s intellectual property, its future prospects could be promising.

Hikma Pharmaceuticals

The Hikma Pharmaceuticals (LSE: HIK) share price fell sharply in late 2021 but has risen 67% since late 2022. The growth has not gone unnoticed. This week, both Deutsche Bank and Citi put in a ‘buy’ rating for the stock.

However, the firm is at risk from stiff competition in the pharmaceutical industry. And the drug maker mainly focuses on the generic drug market in the Middle East and North Africa (MENA). This area is at risk from geopolitical upheaval, which could affect the company’s profits.

It also has a higher-than-average price-to-earnings (P/E) ratio of 29.3, so the current price may be a bit high. The company seems to be doing well, though. It recently bought $135m worth of rival firm Xellia’s assets, including a facility in Ohio. The acquisition highlights the company’s strong expansion goals and will help advance its operations in the US.

Sure, it’s no Pfizer or AstraZeneca but its worth considering as a more diversified option in the pharmaceuticals industry.

The post The UK stock market is brimming with hidden value. Here are some top picks to consider in July appeared first on The Motley Fool UK.

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Mark Hartley has positions in AstraZeneca Plc. The Motley Fool UK has recommended AstraZeneca Plc, Games Workshop Group Plc, Hikma Pharmaceuticals Plc, and Wise Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2024