My 3 picks for the best UK shares to buy in June

Payday is coming and these are the top three stocks that make me want to throw cash at them in June.

Marks and Spencer

In 2016, Marks and Spencer Group (LSE: MKS) took a tumble that wiped 82% off its share price over the following five years. It has since been struggling to recover.

Now it seems to be back in the game with a vengeance after posting impressive earnings this week. With revenue up 9% and adjusted earnings up 45%, it’s no surprise the share price is soaring. Deutsche Bank, Goldman Sachs, and JP Morgan all put in positive ratings for the stock this week.

It’s not in the clear yet, though. It sports a fair chunk of debt after several years of declines and faces stiff competition from rivals. As a higher-end retailer, it could suffer further losses if the economy takes a turn for the worse. I like the direction it’s headed but it’s possible the share price could fall again.

However, the strategy implemented two years ago to revive the business appears to be finally working. As noted by CEO Stuart Machin, sales on both sides of the business (online and in-store) have grown for 12 consecutive quarters.

A British pub favourite

Mitchells & Butlers (LSE: MAB) is a stalwart on the UK pub scene, operating since 1898. Covid hit it hard though and it fell out of profit in 2020, with negative earnings throughout most of last few years. This year has brought a promising recovery though.

In first-half results posted this week, it revealed adjusted operating profits up 64% compared to last year. Revenue is up 7% from £1.28bn to 1.4bn and earnings per share (EPS) more than doubled from 5.5p to 13.5. The results prompted a 14% jump in share price to over 300p, the highest it’s been in almost three years.  

But shifting consumer habits combined with rising costs threaten its bottom line. It’s a powerful and well-established brand but the sector-based risk remains. There’s signs pub culture might be on the decline in the UK, with fewer young people drinking. M&B still delivers the food side of the business but it’s largely known for its boozers.

I still plan to buy the stock but will keep a close eye on societal developments.

Schroders

Asset management firm Schroders (LSE: SDR) was given a buy rating by UBS this week. That surprised me, considering the stock is down 15% in the past year. But the company’s Asia-based investment products have been doing very well recently, particularly its Oriental Income and Asia Income funds. These have helped to shore up disappointing performance on the European side.

Overall, shares in Schroder are estimated to be undervalued by 30% using a discounted cash flow model, so growth potential is there. The trailing price-to-earnings (P/E) ratio of 15.5 is expected to reduce to 12.7 as earnings increase. That could open up several good buying opportunities in the coming months.

But it’s not a growth stock so I wouldn’t expect much from the share price. Even positive analysts envision little more than 9% growth in the coming year. The key value proposition for me is the 5.5% dividend yield, which is well-covered by earnings with a consistent track record of payments. I’m buying it for that.