Not every UKstock fell victim to Fridays Brexit bloodbath. Some kepttheir heads to end the day higher, which suggests they are nicelyplaced to survive the forthcoming economic and politicaluncertainty.
Safe havens
The biggest winners from Fridaysmeltdown came as no surprise. Precious metal miners Randgold Resources (up 14%) and Fresnillo (up 12%) were inevitable beneficiaries of the global chaos triggered by Brexit, as investors rushed for the comfort of a familiar safe haven.
Fridays next best performer was microchip maker ARMHoldings (LSE: ARM), which saw its share price rise a panic-defying 6.48% on Friday. This partially reversed recent losses that followed reports ofthe iPhone first ever quarterly decline in sales. With the pound plunging, ARMsroyalty revenues could bouncemore than 10% once they areconverted back into sterling.
The downside is that at 44 times earnings, ARMhas to keep growing rapidly to justify its pricey valuation. But at least Brexit offersas much of an opportunity asa threat.
Smoke acrossthe water
Contract caterer Compass Groupwas another Brexit winner, up more than 4% on Friday, as its rising global earnings from markets in the US, Latin America and Asia will convert nicely into weaker sterling and counteract the recent slowdown in its emerging markets territories.
Pharmaceutical giants GlaxoSmithKline and AstraZenecaalso rose around4%on Friday and continued risingon Monday, as investors looked for safe ports in the UKs storms, especially ones offering well-diversified global earnings.
And can nothing stopBritish American Tobacco (LSE: BATS)? Its one of the best performing FTSE 100 stocks of the past 10 years, with its share price chart curling upwards as inexorably as smoke from a LuckyStrike. It rose 3.17% on Friday, and 1.61% again on Monday. Smoking kills, but it doesoffer your portfolio life-enhancing qualities.
British American Tobacco has been fighting currency headwinds in recent years, as 70% of its sales are made in emerging markets, where currencies have fallen sharply against the dollar. So at least Brexit meansit can now look forward toa currency tailwind for a change. The price of thissuccess is a highvaluation of 21.33 times earnings and so-so yield of 3.46%, but history suggests thats aprice worth paying.
Raise a glass
Global spirits giant Diageo (LSE: DGE) has suffered a three-year hangover following the departure of former chief executive Paul Walsh, but Brexit has handedit a much-needed hair of the dog, again, courtesy of the plunging pound. Thirsty investors immediately grabbedthe opportunity, with the stock up 3% on Friday and another 1.92% on Monday.
Diageo has also been hit by the emerging market slowdown and falling local currencies. The disappointing2% drop in organic sales in North America in the second half of last year will now be offset by a more than 10%surge in the value of its dollar earnings. Earnings per share have fallen in the last three years but that looks set to reverse, with a forecast rise of 8% in the year to 30 June 2017. Even at21.6 times earnings, Diageo looks a tempting buy for the first time in several years, so even the most ardent pro-Remain investors can raise a glass to Brexit.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended ARM Holdings, AstraZeneca, and Diageo. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
