5 stocks to watch in August

Important information - investment values (and income from investments) can go down as well as up, so you may get back less than you invest.

Understanding L&G's business model is key to understanding its investment case. The group has three core divisions. Its largest, institutional retirement, generates around two-thirds of profits and focuses on “pension risk transfers”. This is where defined benefit pension schemes hand the keys over to an insurer. The market has been booming since interest rates rose, and L&G is one of the dominant players.

There is also an asset management business, which manages money on behalf of clients such as pension funds, and a retail division, which offers products like SIPPs, annuities and life insurance. The annuity market has also been booming of late, because higher interest rates have made guaranteed retirement incomes much more attractive. 

L&G will publish its half-year results on 5 August. The company reported strong earnings growth in its last set of full-year results and is in the middle of a £1.2bn share buyback³, the largest in its history. However, some investors have become more cautious amid concerns about rising competition, particularly from large US asset managers.

The shares have also endured a difficult few years, meaning management will be keen to reassure investors that its growth plans are on track. 

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Diageo

Full-year results: Thursday 6 August

It has been a tough few years for drinks giant Diageo, which owns brands including Guinness, Tanqueray and Baileys. Demand for premium spirits boomed in the aftermath of Covid-19, sending shares sharply higher.

Today the backdrop is very different. The main challenge is North America, which accounts for almost 40% of Diageo’s revenue. Net sales in the region fell by about 10% in the third quarter of its financial year. This reflected weaker consumer demand, but comparisons were also distorted because distributors had brought forward imports a year earlier to get ahead of US tariffs.⁴

The company has a new chief executive who is trying to turn things around, and investors will be seeking reassurance when Diageo publishes its full-year results, plus a strategy update, in August. Cost-cutting is high on the agenda, with the company aiming to deliver $625m of savings over the next three years.⁵

Another big challenge for Diageo is debt. Net debt to Ebitda - a measure of borrowing relative to profit - sat at 3.4 times last year, versus a FTSE 100 average of 1.7 times. Combined with higher interest rates, this means Diageo spends a huge amount of cash repaying loans. In the first half of this year alone, it paid $477m of interest, which weighed heavily on its cash flow.

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BP

Half-year results: Tuesday 4 August

Oil companies have been attracting plenty of attention lately. When conflict broke out in the Middle East, the price of oil surged to more than $110 a barrel, boosting profits across the sector. In the first quarter of 2026, core profits at BP more than doubled year on year to $3.2bn.⁶ The company attributed this to the "rising price environment", while its oil trading division also benefited from heightened market volatility.

The oil price fell back after a peace deal was agreed between the US and Iran but has started rising again as tensions in the Middle East have resurfaced. If prices remain elevated, this should provide another tailwind for BP and rivals such as Shell.

However, there is plenty happening inside the company too. After several years of upheaval and high profile exits, BP is now under the leadership of Meg O'Neill, who took the reins in April. Her priorities include cutting costs and reducing debt. To support this, BP has suspended share buybacks, making it something of an outlier among the major oil companies, many of which have used buybacks extensively to boost shareholder returns.

BP’s role as an income stock has already come under some scrutiny, having halved its dividend back in 2020. This set it aside from US giants like Exxon Mobil and Chevron, which have not cut payouts for decades. The suspension of buybacks, while designed to heal the balance sheet, might exacerbate some of these worries.

While all eyes will be on the oil price in the short term, therefore, BP’s half-year results might give us an insight into how its longer-term, structural transformation is going.

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InterContinental Hotels Group 

Half-year results: Tuesday 11 August

Energy is not the only sector to be affected by conflict in the Middle East. According to EY-Parthenon, travel and leisure recorded more profit warnings than any other FTSE sector in the second quarter of 2026, reflecting concerns about geopolitical tensions and the economic outlook.

For now, however, InterContinental Hotels Group - or IHG - remains upbeat. Unlike many hotel companies, IHG has an asset-light business model. Rather than owning most of its hotels, it typically manages them or licenses its brands to franchisees. In return, hotel owners pay IHG fees. This allows the company to expand without spending billions buying property, and it has grown rapidly in recent years.

The owner of Holiday Inn also seems fairly insulated from geopolitical drama. In a recent update, IHG said any impact from the Middle East conflict would be “more than offset by increases in demand elsewhere”, noting that demand is “heavily weighted to domestic and intra-regional travel”.

The figures back this up. IHG’s revenue per available room, or “RevPAR”, increased by more than 4% in the first quarter, with broad strength across all regions except the Middle East. IHG has also been returning large amounts of cash to shareholders. Its $950m share buyback programme, together with dividends, is expected to return more than $1.2bn to investors this year.⁷

Even so, travel remains a cyclical industry. A slowdown in the global economy or an escalation in geopolitical tensions could weigh on travel demand. Investors will be looking for any clues about whether IHG expects momentum to continue in its half-year results.

• More on InterContinental Hotels Group

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Source:

¹ Next Annual Report and Accounts, January 2026
² Legal & General, July 2026
³ Legal & General, 2025 Full Year Results, 11 March 2026
⁴ Diageo, Fiscal 26 Q3 trading statement, 6 May 2026
⁵ Diageo, Fiscal 26, Q1 trading statement, 6 November 2025
⁶ BP, first quarter 2026 results
⁷ IHG, 2026 First Quarter Trading Update, 7 May 2026