Should You Buy, Or Avoid, These UK Shares Before The End Of August?
In this article I am looking at two UK shares and asking the question: should you buy or avoid them in the final days of August?
Caledonia Mining Corporation
I’d happily buy gold stocks as we move through August and into September. There are some real peaches for value hunters to sink their teeth into right now. And Caledonia Mining Corporation is one of these low-cost heroes. It trades on an earnings multiple of just 8 times for 2020. It carries a handy-if-unspectacular 2% dividend yield as an extra sweetener, too.
As I’ve commented before, there’s plenty of macroeconomic and geopolitical considerations that should drive keep driving gold prices northwards in the near term and beyond. Another significant driver for commodities prices is the steady fall in the US dollar, a phenomenon that makes it cheaper to buy resources.
Indeed, the greenback’s fall to fresh multi-month lows against both the British pound and the euro in recent hours has helped send bullion values above $2,000 per ounce again. Prolonged support can be expected as the Federal Reserve likely keeps the money printers switched on. Speculation is mounting that the central bank will ditch its 2% inflation target in the very near future to keep its ultra-loose monetary policy in business.
Caledonia Mining’s share price has rocketed 167% since the start of the year. I’m tipping it to continue rising for some time yet.
I’d steer clear of recruitment specialist Hays, though, in the run-up to full-year results due on Thursday, August 27. A poor outlook for the global labour market makes this UK share a risk too far in my opinion.
Conditions certainly remain challenging in Hays’s home territory of Britain. As IGD said in its latest update on the health of the domestic labour market up until July: “the number of employees in the UK fell steadily from February onwards, although it is likely that much of this loss was accounted for by reduced recruitment rather than by redundancies.”
The impact of Covid-19 is just one problem that threatens to derail business in the UK (not to mention at its overseas units). Hays also faces the prospect of prolonged pressure on these shores once Brexit completes later this year. This is why City analysts expect Hays to follow an annual reversal north of 60% in the last fiscal period (to June 2020) with a 51% drop in the current financial year.
The Hays share price has plummeted by a third in 2020. And the chances of it falling again later this month when fresh market commentary is released are high, in my opinion. With the business trading on a forward P/E ratio of 22 times, too, I see little reason to buy it today.