As the dust settles after the Brexit vote,investors are getting back to the normal, day-to-daybusiness of buying and selling shares. The sell-offthat cameafter the vote means that there are now a whole host of opportunities in the stock market.
In this article, Ive picked three companies I think havegreat potential. One is a bank, another an airline, and another a fashion brand and retailer.
HSBC Holdings
Of all Britains retail banks, my top pick is HSBC (LSE:HSBA). Why? Because its a financial that hasa substantial stake in fast-growing emerging markets such as China and India. It also has had little exposure to scandals such as PPI and has incurred relatively small amounts of bad debt after the Credit Crunch. Plus it, alone ofall the UK banks, still books multi-billion poundearnings every year. In 2015 it made 10bn of net profit. Thats a number that knocks rivals such as Barclays and Lloyds out of the ball park.
Yet, despite all these positives, the share price has been sliding for the past three years.Combine the low rating withthe strength of the fundamentalsand youll see thatthiscompany is now a value and a contrarian play.
The current P/E ratio is 10, and the dividend yield is an impressive 7.23%. Thatmakes HSBC an enticing investment prospect.
International Consolidated Airlines Group
IAG (LSE:IAG) has been hit hard by the recent chaos in financial markets. The share price has fallen from a 2015 high of 617p to just 353p. Yet this is a firm that has benefitted immensely from the low oil price.
Earnings per share have ballooned from 5.44p in 2013 to 51.96p in 2015. Thishas meant thecompanys valuation has been on the up. And the recent share price tumble has, I think, created a buying opportunity.
After all, this business now sells on an incredibly low P/E ratio of 7.24, with a dividend yield of 2.03%.
My view is that, seeing through the short-term noise, oil prices are likely toremain low for the next few years. And that will put a floor on IAGs profitability and its share price. So this a long-term growth and value play.
Burberry Group
Burberry (LSE:BRBY) is another company that has seen a mighty pull-back in the past few years. From a high of 1,872p in early 2015, the stock valuation has slid to just 1,169p. But this is still a firm that has been churning out profits consistently year-on-year.
Because it makes most of its money overseas, and particularly in emerging markets, Burberry will be little affected by Brexit. Theclothing label is one of Britains strongest fashion brands, and its take on classic British trench coats, scarves and dresses will, I suspect, stilldelight fashion-conscious emerging market shoppers for many years to come.
Whats more, a P/E ratio of 15.49, with a dividend yield of 3.06%, means that investors can buy international growth at a very reasonable price.
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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has recommended Burberry and HSBC Holdings. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.