5 Shares Set To Prosper From The Rise Of The Silver Pound: Kingfisher Plc, Lookers Plc, TUI Travel Ltd, Whitbread Plc & Aviva Plc

Dave Sullivan thinks that shares in Kingfisher Plc (LON: KGF), Lookers Plc (LON: LOOK), TUI AG NEW ORD REG SHS NPV (POST-16/12/14)(DI) (LON: TUIJ), Whitbread Plc (LON: WTB) and Aviva Plc (LON: AV) could be set to 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.

After the much-anticipated pensions freedom day came and went on Monday, I thought that it would be a good idea to take a look at a country that has a similar set of rules as those that are now in force here in the UK.  

The country in question is Australia. Let’s take a look at some of the trends and the companies that could prosper, which I’m keeping an eye on.

Home Improvement

Over a third of retirees either improved or bought their home.  This sounds like a sensible plan to me.  It takes me to the first company set to benefit: Kingfisher (LSE: KGF).  Despite the challenges, both here and abroad, this company has a strong market position through its B&Q and Screwfix brands.  The company also has a new CEO in the form of Véronique Laury, and it already looks like she is starting to make her mark: she plans to close around 60 unprofitable stores in the UK and a few loss-making stores in Europe.  It is true that we could see some mis-steps as the company makes the transition to ‘one’ Kingfisher, but I think there is potential here for long-term investors.

Gone In 60 Seconds

One of the views held by opponents of these new-found freedoms was that retirees would be rushing to buy themselves a car that they have wanted since a child. Whilst I suspect that there will be a few more supercars with the roof down flying past me on the M6, I think the majority of the 20% using some of their cash to purchase a car will settle for a newer model, rather that a vehicle that can achieve 0-60mph yesterday.

This brings me on to my second pick: Lookers (LSE: LOOK).  This diversified retailer boasts nationwide coverage: it leases, sells and services vehicles to businesses and the public.  True, it is a cyclical company, but with the shares trading on a forward P/E of around 11 times earnings and yielding over 2%, I think that there could be more in the tank as the year progresses.

Wish You Were Here

One of the most popular options — in this country, at least — seems to be holidays.  This, in my view, could be one of the big winners for the UK, despite this option not being as popular in Oz.

One of the potential winners (for my money) could be TUI Travel (LSE: TUIJ).  Indeed, over the years this has been the choice of a number of my ex-colleagues — who could resist the offer of a holiday of a lifetime?  The added attraction here is the recent merger with the sister company and the offer of some significant synergies as systems and processes are integrated.  At 17 times forward earnings and yielding over 3%, this share doesn’t scream cheap — but, with earnings expected to grow by nearly 35% this year, I think it will fit nicely into its valuation in due course.

Debt? What Debt?

In a similar theme to people being sensible and paying their mortgage off, it would appear that cash will also be channelled into debt repayment, too. With around 12% of our antipodean relatives either paying their debts down, or off completely, the monthly benefit could well be significant — think of how many people with some additional cash in their pocket will now be able to relax with a coffee at their local Costa and eat out on a more regular basis.  I think that shares in Whitbread (LSE: WTB) are certainly worth watching.  

I remember casting my eye over these shares when they were around the £25 mark. I passed, thinking that they looked expensive — a costly mistake.  At 22 times forecast earnings and yielding less than 2%, they still look expensive… but I’ll be keeping my eye open for an opportunity, should one present.

Playing It Safe

The remainder seemed to play it safe and just bought an annuity.  As investors, we should not underestimate the power of a regular and guaranteed income, which — for some — is the preferred option.  

This brings me to my final pick: Aviva (LSE: AV) a diversified insurance company, currently trading at quite a discount to the sector and some of its peers.  Perhaps this is due to market worries surrounding the acquisition of Friends Life — this can often be the case with such a large acquisition, as there can be unforeseen issues as systems, staff and processes are integrated. However, with the shares trading on a forward P/E of around 11 times earnings and yielding around 4%, they are worth a second look.

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.

Dave Sullivan 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.

More on Investing Articles

Young black colleagues high-fiving each other at work
Investing Articles

Is Legal & General Group one of the FTSE 100’s greatest value shares?

Legal & General shares boast low P/E ratios and massive dividend yields. Could they be one of the London stock…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

I’m looking for the best FTSE 100 value stocks to buy now. Have I found them?

Barclays, NatWest, and Imperial Brands shares are recovering strongly. But these FTSE 100 stocks still trade on rock-bottom earnings multiples.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Where on earth will Nio stock be in 1 year?

Nio stock has demonstrated extraordinary volatility over the past 12 months, but where will it be in a year's time?…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

6.9% dividend yield! 2 cheap stocks to consider for a £1,380 passive income

Looking for a market-beating passive income? These FTSE 100 and FTSE 250 dividend stocks could provide a healthy second income…

Read more »

Mature black couple enjoying shopping together in UK high street
Investing Articles

Potentially 34% undervalued, should I be watching the boohoo share price?

The boohoo share price has seen a rocky few years, but with signs that the economy is improving, could this…

Read more »

Investing Articles

Is the Amazon share price primed for a drop?

The Amazon share price has been on a tear for the last year, but can this trend continue? Gordon Best…

Read more »

Photo of a man going through financial problems
Investing Articles

Down 15% in a week! What’s gone wrong with the National Grid share price?

The National Grid share price isn't supposed to crash but now it has. Harvey Jones is wondering whether to take…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Taylor Wimpey just paid me £158.78. I’m aiming to turn that into a £100k yearly second income

Harvey Jones says small, regular dividend payments can turn a few pounds into a mighty second income, if he gives…

Read more »