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Brexit may have caused market turbulence, but “it has also created opportunities for investors”, a recent report from a German bank has noted.
London-based researchers at Berenberg, headquartered in Hamburg, set out “to identify those stocks that are either more resilient to Brexit uncertainties than the market appreciates, or are completely immune and offering compelling value.”
The Berenberg analysts found 12 firms that fit the bill:
An Airbus 380 during the Farnborough International Airshow, 13 July 2016. Photo: Airbus Group
The aerospace and defence company Airbus. “It is likely to benefit from euro weakness,” wrote the Berenberg researchers.
Ashtead, an equipment rental outfit, which “generates 92% of operating profit in the US, and now trades on a 25% discount to rental peers despite better growth/returns,” according to the report.
The maker of chip-manufacturing equipment ASML, as “the UK is a small end-market for” the firm.
CRH, the construction supplies vendor. “Although there could be an impact on the UK business, the total exposure is only 11% of EBITDA and it largely avoids what we perceive to be the principal risk of falling prices in emerging markets for the cement majors.”
Diageo, the drinks company. “The market has already rewarded Diageo’s favourable FX exposure, but we think the next numbers should show an improvement in trading, allowing it to re-rate towards spirits peers.”
The funeral services firm Dignity. “Demand is driven by UK mortality rates, and is therefore not cyclical,” the Berenberg researchers wrote.
Fresenius Medical Care, which provide dialysis equipment and services. “A highly predictable business, driven by 6% global market volume growth, with 70% revenue exposure to the US.”
The specialty chemicals company Johnson Matthey, which “generates only 5% of sales in the UK, so will benefit from a substantial FX tailwind.”