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Five Best of Brexit shares

Which shares look set to benefit from Brexit?
October 12, 2016

For five years this column has been following a “Best of British” screening strategy that aims to pick FTSE 350 companies that generate most of their sales in the UK and look promising based on price and earnings momentum and some basic quality measures. The recent referendum and the negative implications for UK focused stocks delivered something of a broadside to this screen, although, long-term performance continues to look impressive. However, in an attempt to focus on where the action has really been since the vote for the UK to leave the EU, I’m turning the screen on its head this week to create a “Best of Brexit” screen. All the screening criteria are the same, except rather than looking for companies that generate more than three-quarters of their sales in Britain, I’m looking for those that get more than half their revenues from other shores.

Since the Brexit vote, a consistent theme that seems to have emerged is sterling weakness. The most recent downward leg followed Prime Minister Theresa May’s comments at the Conservative Party conference that suggested the country may be heading for a so-called 'hard' Brexit and that Article 50 would be triggered before the end of March 2017, after which detailed negotiation will get under way. While sterling could bounce back, the prevailing sentiment increasingly seems to be the pound will stay – to borrow a phrase – lower for longer.

 

Sterling vs US dollar

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