As the FTSE 100 is beaten down by fears about Britain’s exit from Europe and the disruption it could cause, clever contrarians will realise that this could be the ideal time to buy into shares.
But you will need to choose carefully what you invest in. Stock picking is an art, and is more important than ever in this rapidly changing market.
In this article I have selected a housebuilder, a European bank, and a premium consumer brand as my three buys of the moment. After the Brexit drama has subsided, they could be set to storm ahead.
Barratt Developments
I have long been a fan of the housebuilders as investments after the Credit Crunch, and Barratt Developments (LSE: BDEV) is one of my top picks in this sector. Cannily, during the property slump it bought up land and housing stock, invested in redevelopment and then started selling these properties as house prices climbed steadily higher.
Every now and then you will read attention-grabbing articles about the next housing crash. I wouldn’t believe them — a rapidly rising UK population, a record number of jobs in this country, and a continued desire amongst the young to own their home, alongside the buy-to-let boom, means that house prices should continue their climb higher.
If you want to invest in this boom, then Barratt is a great way to buy in. It represents good value at a 2016 P/E ratio of 9.64, and a dividend yield of 5.89%. This combination of growing earnings, value and high yield is hard to beat.
Banco Santander
What appeals to me about European bank Banco Santander (LSE: BNC) is that its share price has been sliding to very low levels, yet this is a company that still churns out profits consistently year after year. Thus I think the share price falls have opened up a buying opportunity.
Banco Santander is a global bank with businesses around the world, including Spain, Britain, Latin America and Asia. Thus it is part developed world and part emerging economy bank. It has 185,000 employees. As such, it is remarkably cheaply priced, at a 2016 P/E ratio of just 8.43, with a dividend yield expected to be 5.75%.
With earnings being posted each year at around 30p per share, this is both a value play and an income share to add to your portfolio.
Supergroup
I strongly believe consumer stocks like premium fashion retailer Supergroup (LSE: SGP), which owns the SuperDry brand, will do very well in the coming global consumer boom.
This is a firm that is grabbing a slice of the youth fashion market traditionally occupied by companies like Tommy Hilfiger and Gap.
The thing about the best premium retailers is that they never go out of fashion. Instead they constantly reinvent themselves, and improve their offer. I have noticed the improved quality of SuperDry’s new clothing ranges, and I think other customers have as well.
As Supergroup continues to build stores around the world, I am a firm believer in the long-term prospects for this company.
