Just released: our top 3 stocks to consider buying in September [PREMIUM PICKS]

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Our monthly Best Buys are now designed to highlight three of our team's favorite, most timely Buys from our growing list of small-cap recommendations, to help Foles build their stock portfolio.

Why we love you: “Bloomsbury (LSE: BMY) owns the printing rights to the Harry Potter books in the UK, and surprisingly, the first book in the wizarding series is the third best-selling children's book this year, some 26 years after it was first published. Talk about valuable intellectual property! The company also nurtures star author Sarah J Maas, publishing 15 titles so far by the popular author, whose catalog of titles has seen a massive 51% increase over the past year.

“But while strong sales of consumer titles are welcome, the non-consumer division – which represented around 37% of total sales last year – could provide a long-term growth driver. The company has evolved into a major player in education in recent years. Through its digital platform – Bloomsbury Digital Resources (BDR) – the company provides educational resources to academic libraries and institutions. Bloomsbury expects that BDR should achieve organic sales growth of around 40% by 2027/28 – and it represents an incredible margin opportunity, in our view.”

Why we love you now: Bloomsbury recently reassured investors that trading in the four months to the end of June was in line with newly developed expectations. The company is expected to enjoy full-year sales and profits of £319m and £37.6m respectively. Although the company is unlikely to continue to improve forecasts, and we do not make promises of short-term profits, in the long run I still think that the company is undervalued by investors. The company's consumer division will likely continue to benefit from Sarah J Maas' “publishing frenzy,” as she has six more books under contract, and these titles should benefit from word of mouth and social media recommendations. Readers tend to stay loyal to their favorite authors, and I think the recent decline in sales will continue as more readers come to appreciate Maas and subsequently want his entire catalog.

A quick note on diversification: investors who have benefited from strong gains in the past from Bloomsbury may wish to avoid adding to their position, as over-concentration in any one company can be dangerous. As a general rule, we suggest that members build a small portfolio of at least 15 stocks, spread across a wide variety of industries, to avoid over-concentration in just a few positions. This may be part of a broader portfolio that eventually includes 25-30 companies, including mid-sized and large companies.