With Brexit done (at last) now’s the time to buy British again
RIDING on a wave of patriotism after our exit from the EU? Well, you may be keen to buy British when it comes to your stocks and shares.
Here we take a look at which UK stocks are tipped to make the nation proud — and bring investors welcome returns.
Investment experts are predicting 2020 will be a prosperous year for many UK firms as Brexit trade negotiations begin, with house-builders among those set to capitalise on the certainty brought about by the Tory election victory in December.
Investment management firm Brewin Dolphin has pinpointed five stocks that it says combine strong performance with growth prospects.
First is British alcohol conglomerate Diageo, which has seen its stock price rise 56.3 pc in the past five years, while total investment return is at 78.1 pc (all sums assume dividends are re-invested). So, a £10,000 stake would be worth £17,810 now.
Diageo’s more than 200 products include famous names such as Gordon’s gin, Johnnie Walker whisky and Captain Morgan rum.
Meanwhile, contract catering firm the Compass Group — customers include Imperial War Museums and Heathrow airport — has seen its stock price rise 63.6 pc in five years, with total returns at 90.4 pc.
Brewin Dolphin investment manager Rob Burgeman says the food firm is now ‘truly international with significant exposure to the U.S., which has been the engine of growth for many years’.
Chemicals company Croda, in the East Riding of Yorkshire, has seen its stock price rise 77.2 pc in five years, with total returns at 107.5 pc. A £10,000 investment would now be worth £20,750.
Insurer Hiscox is up 69.2 pc with total returns at 89.6 pc.
Brewin Dolphin also tips pharmaceutical company GlaxoSmithKline which produces Sensodyne and Aquafresh toothpaste plus painkiller Panadol. While the stock price is down 0.2 pc over the past five years, total returns sit at 7.4 pc.
Mr Burgeman says: ‘ There are undoubtedly some world- class companies in the UK which will relish the opportunities created by a renewed relationship with our major trading partners.
‘The UK has, since the time of the Industrial Revolution, been an economy that has looked outwards; and for many of these global companies, a clearing away of the clouds of uncertainty — not to mention a more stable political outlook — should create an environment in which they can look to invest with more confidence in the UK.’
He says investors looking for a fund with exposure to UK firms could try Liontrust Special Situations fund, which has produced a total return of 66.2 pc in five years — turning £10,000 into £16,620.
Investment platform A J Bell believes 2020 could be a good year for house-builders and banks.
Russ Mould, A J Bell investment director, says house-builder Vistry, formerly known as Bovis Homes, is set to perform well.
He says: ‘The company took a step back to make improvements to its operations after it ran into trouble over build quality in late 2016 and early 2017 and is now very much on the front foot.
‘It expects to report a record adjusted pre- tax profit of £181.6 million for 2019 and earnings per share is expected to rise more than 40 pc by 2021.’
Mr Mould also tips Lloyds Banking Group. He says: ‘Analysts forecast Lloyds to make a profit of £7.3 billion this year, helped by the fact that fines for payment protection insurance should be in the rear-view mirror now the final claims deadline has passed.
‘The stock also comes with an attractive forecast dividend yield of about 6 pc this year, with the payment covered twice by earnings, making it particularly attractive to income-focused investors.’ A J Bell says funds that could benefit from Brexit Britain include the £33 billion Merian UK Mid Cap fund, which includes holdings such as fashion firm Boohoo, and which, over the past five years, has delivered a 81 pc return.
The platform also suggests J P Morgan’s 135-year-old Mercantile Investment Trust which has seen its share price double in value over the past five years.
Steve Clayton, Hargreaves Lansdown’s head of equity funds, backs a house-builder in the form of Berkeley Group.
He says: ‘This London-focused home-builder has a land bank of sites that will keep it busy for years. The election result gives the London market a better environment than for years, and Berkeley is well placed to prosper.’
Hargreaves also tips car sales firm Auto Trader and online estate agent Rightmove. Mr Clayton says: ‘Both spotted the chance to take the small ads online and both captured dominant positions in the UK listings sectors.’
He says credit data firm Experian could also perform well, adding: ‘It’s the global leader in what it does and we think its growth prospects are excellent.’