Today I’m looking at four Footsie stars that should thrive in a post-EU world.
Mobile master
I’m convinced Vodafone’s (LSE: VOD) global spending spree should deliver splendid revenues growth regardless of a cooling UK economy.
The telecoms giant’s £19bn Project Spring organic investment programme has transformed the company’s international presence, turning around its ailing European operations and bolstering its position in Asia, Africa and the Middle East.
Meanwhile, Vodafone’s on-going M&A drive in the quad-play entertainment market not only promises rich rewards in its own right, but also provides terrific cross-selling opportunities for the London firm’s traditional products.
A forward P/E rating of 34.6 times may be expensive on paper. But a dividend yield of 5.1% times more than offsets Vodafone’s heady multiple, in my opinion.
Pharma fizzer
The defensive nature of medicines demand makes Dechra Pharmaceuticals (LSE: DPH) a splendid pick for those seeking safe havens from the Brexit fallout.
In particular, a backcloth of surging wealth levels in developing regions, combined with historical underinvestment in healthcare in these places, should deliver terrific sales growth at Dechra.
And the fruits of Dechra’s acquisitions strategy provide more reasons to be cheerful — revenues leapt 21% in the 12 months to June 2016 as a result of these endeavours.
Like Vodafone, Dechra’s forward P/E ratio of 28.7 times may be expensive on paper. But I believe the firm’s strong sales outlook merits such a rating.
Manufacturing marvel
Household goods giant Reckitt Benckiser (LSE: RB) has also proved a popular pick in recent weeks thanks to its pan-global presence.
The London company currently sources 31% of group sales from emerging markets, a percentage I expect to step higher as disposable income levels in these regions rise. Reckitt Benckiser is also a major player across North America and Europe.
And the firm has a stable of market-leading labels to fall back on, with products like Durex condoms and Air Wick air freshener boasting unrivalled pricing power. This provides Reckitt Benckiser with terrific earnings visibility regardless of broader macroeconomic pressures.
I reckon these qualities make Reckitt Benckiser a brilliant buy despite a slightly-toppy P/E rating of 26.1 times for 2016.
On fire
For value-seekers looking for defensive stars at a better price, I believe British American Tobacco (LSE: BATS) could be one such candidate. The cigarette maker currently deals on a prospective P/E multiple of 20.1 times, while a 3.4% dividend yield is in line with the FTSE 100 average.
On the one hand, British American Tobacco’s growth prospects may be considered less-than-stellar as mounting regulatory pressure across the globe smacks sales for the industry’s major players.
But brands like Dunhill and Pall Mall are enabling British American Tobacco to overcome these problems through market share grabs. Besides, the London firm is diversifying into other non-tobacco areas like e-cigarettes to mitigate the structural decline in cigarette demand.
I fully expect British American Tobacco’s bottom line to keep swelling during the near term and beyond.
