5 stocks to watch in September

Autumn is almost upon us and the UK stock market is entering a new season too. The FTSE 100 and the FTSE 250 were both reshuffled this week, ushering in some new faces - and dispatching with some familiar ones.

Property developers Taylor Wimpey and Unite Group have fallen out the FTSE 100. They have been replaced by Burberry and Metlen Energy & Metals, which listed in London in just a month ago. Further down the market cap spectrum, ASOS has been demoted from the FTSE 250, alongside Harry Potter publisher Bloomsbury.

This is not the only news September brings. Despite a busy summer of corporate results, some of the UK’s biggest companies are still waiting to report their figures - and investors are expecting good things.

This article is not a recommendation to buy or sell an investment; it is purely insight into some of the companies that announce results over the next month.

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Burberry

It’s official: Burberry is back in the FTSE 100 after a year-long absence.

Shares in the fashion house took a turn for the worst in 2023, when demand for luxury goods started to wane. This slowdown coincided with attempts by Burberry to raise its prices. A profit warning followed, and the company fell into a loss this year.¹

Under new chief executive Joshua Schulman, however, a turnaround is taking shape. Schulman is on a mission to slash costs, with plans to save £100m a year by 2027. Around 1,700 jobs are expected to be cut in the process. Meanwhile, marketing budgets are being thrown behind products with the strongest following, such as coats and scarves.²

Burberry is not due to publish its half-year results until 13 November. However, there were some early signs of improvement in its first-quarter trading update in July. Sales are now sinking at a far slower rate, and the company flagged an ‘uptick in brand desirability’. Recovery was led by the Americas and Europe, while sales in China continued to decline.³

Investors are certainly feeling optimistic. Shares have risen strongly in the past year and analyst profit forecasts have stabilised.

• More on Burberry

ASOS

Elsewhere in the fashion world, times are tougher.

ASOS burst onto the FTSE 250 in 2022, after some excellent trading during the pandemic. Sales were rising fast, profits were rising even faster, and the company splashed out on new inventory.

 Since them, however, ASOS has faced some big challenges - and this week it left the FTSE 250. Its thin margins have been eroded by inflation and Chinese fast-fashion groups such as Shein have been enticing customers away from the site. As a result, ASOS has been left with lots of clothes that are hard to shift.

The company is now in the midst of a turnaround: the auditor was switched in July,⁴ and there have been multiple boardroom departures this year. It is hoped these changes will push ASOS into a phase of ‘sustained operational execution’.

In the six months to March, ASOS banked an adjusted loss before tax of £69.5mn, and an unadjusted loss of £242mn. The difference is due to some large one-off costs, including a site closure in Atlanta.⁵

There are some encouraging signs, however. The gross profit margin is climbing again and management said stock levels are down 60% since 2022.⁶

ASOS is expected to publish its full-year figures in October. However, the FTSE reshuffle me6ans it will attract plenty of attention this month. Investors will be looking for signs of stability after all the disruption.

Analysts expect sales to fall in the year to August 2025, before picking up again in 2026.

• More on ASOS

Taylor Wimpey

Taylor Wimpey is another victim of the FTSE reshuffle. The housebuilder has been kicked out of the FTSE 100 for the first time in a decade, following a tough period for shares.

The state of the property market is partly to blame, with high interest rates deterring buyers - particularly first-time buyers. However, Taylor Wimpey has also been hit by some one-off costs, including a big cladding provision in its half-year results in July.⁷

Taylor Wimpey remains a favourite with personal investors though. It was the second most popular stock on the Fidelity platform in August, on a net sales basis. This is partly due to its generous dividend policy, which aims to pay out 7.5% of net assets or at least £250m every year - even during a downturn.⁸

After a difficult period for shares, the company’s dividend yield now sits at almost 10%. Please note this is not guaranteed.

Indeed, with Taylor Wimpey out of the blue-chip index, there will be even more focus on whether it can maintain this dividend policy. Ultimately, much will depend on the state of the housing market.

‘Homebuilding in the UK is highly cyclical, competitive, and capital-intensive, with minimal scope for large participants to carve out defensible competitive advantages,’ analysts at Morningstar concluded.

The arrival of the Labour government certainly gave the property sector a boost in 2024. And housebuilders frequently stress that the ‘long term fundamentals’ are positive, given the significant unmet need for UK housing.

But questions are now being asked. Will the government succeed in building 1.5m new homes by 2029? And how will demand fare in the current economic climate?

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of  Fidelity’s advisers or an authorised financial adviser of your choice.