3 Shares That Can Benefit From A Resurgent UK Economy

UK GDP is back to pre-crisis levels. Here are three stocks that could benefit…

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

ChampagneIt’s been a long, hard road but the UK economy is finally back to the same size as it was prior to the credit crunch. Indeed, today’s GDP numbers came in bang on target at 0.8% for the second quarter of the year and, with the IMF raising the UK’s growth forecast for the year to a heady 3.2%, here are three companies that could benefit from an upsurge in economic activity in the UK.

Wm. Morrison

Although Wm. Morrison (LSE: MRW) has focused on its pricing in recent months, with the supermarket cutting a range of prices so as to try and compete with discount retailers, an upsurge in the UK economy could be a major benefit to it. That’s because Wm. Morrison has invested heavily in its supply chain and has focused on providing fresh, quality produce within its own brands. Certainly, this has apparently been lost on UK shoppers in recent years, as they have become obsessed with the cost of everything. However, increased economic activity means increased wealth, which in turn could switch the focus of shoppers back to quality rather than price. In that case, Wm. Morrison, trading on a price to earnings (P/E) ratio of just 11.8, could be a winner.

RBS

It’s a double celebration for shareholders in RBS (LSE: RBS) today, as the bank reported better-than-expected second quarter results to complement the UK’s new GDP highs. Indeed, a resurgent UK economy has been a major reason why RBS has made a profitability comeback this year, with the bank forecast to return to the black for the first time since the credit crunch began. That’s because an improved UK economy means more loans, fewer bad loans and less asset write-downs; all of which make a positive impact on RBS’s bottom line. Trading on a price to book ratio of just 0.4, RBS still screams value even after today’s rise in its share price.

GlaxoSmithKline

Although its sales are mostly generated outside of the UK, GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) could still benefit from a wealthier UK. That’s because more wealth means more capital to invest in shares, with undervalued stocks such as GlaxoSmithKline that offer a great dividend yield likely to be among the most popular. Indeed, GlaxoSmithKline currently yields a highly impressive 5.7% and trades on a P/E of just 14.1. With a highly diversified and impressive drug pipeline, GlaxoSmithKline could attract investors and rebound from the year lows that it is currently experiencing to post strong gains going forward.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of GlaxoSmithKline, Morrison, and Royal Bank of Scotland Group. The Motley Fool recommends GlaxoSmithKline.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »