Although the polls suggest that the UK is likely to vote to remain in the EU on 23 June, itisnt a done deal. Polls have been wrong before and a sudden crisis, for example a eurozone meltdown orfresh refugee surge, could trigger a late shift in sentiment.
Brexit stage left
If the UK does back a Brexit, it will be a blow both to UK stock marketsand the pound, which could fall by anything between 10% and 20%. Yet some companiesare likely tobenefit, as Russ Mould at trading platform AJ Bell has pointed out.This will be a great opportunity for UK-listed companies with heftydollar earnings, notablythe following three stocks.
Ashtead Group
FTSE 100-listedBritish industrial equipment rental companyAshtead Group (LSE: AHT) has massive exposure to the dollar, with US subsidiarySunbelt Rentals operating from more than 513 locations in the country, and accounting for a whopping85% of itsrevenues.
In March, Ashtead reported a 17% rise in group rental revenue to 1.675bn at constant exchange rates, generating a pre-tax profit of 481.8m, up 20%. The US business is both larger andgrowing at a faster pace.Sunbelts revenues rose 21%, against just9% at UK business A-Plant. Some investors have been worried by a slowdown in the US economy, notably inUS non-residential construction markets, but thispales against the disruption Brexit wouldbring. Ashtead is up a whopping 444% over five years and there could be more excitementto come.
Wolseley
Plumbing and heating merchantWolseley (LSE: WOS) also generates 85% of its revenues overseas, including a healthy chunkfrom the US, as well as the Nordics. Ithas also enjoyed a storming five years, itsshare price rising106% in that time. In March, it reported continued growth and market share gains in US commercial and residential markets, although this was partly offset by weak industrial markets.
Again, the US was brighter than the UK, where Wolseley was forced to controlcosts and restructure to survivea challenging market.The Nordics are also doing better, and so will their currencies relative to the pound if Brexit wins the day (only Finland is in the euro).
BAESystems
BAE Systems (LSE: BA) has been on the back footlately, its share price falling 6% over the past year as it continues to take a hit from austerity-driven defence spending cutbacks. Defence budgets are marching forwards again and BAE posted a 15.5% leap inoperating profitsfrom 1.3bn to 1.5bn,helped by the delivery of Typhoon fighter jets to Saudi Arabia.
BAE has secured more big US contractslately. These include a deal worth up to $1bn toupgrade F-15 aircraft, a contracttosupport the US combat vehicle industrial base, and afive-year US Army contract for the Enhanced Night Vision Goggle III and Family of Weapon Sights, with a potential value of $435m. TheUS Intelligence & Security sector accounts for 70% of BAEsof Cyber & Intelligence sales in 2015. All these dollar numbers will look even tastier when converted back into a weakened sterling. If, that is, Briton votes for Brexit.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
