With all the uncertainty surrounding the Brexit process, it’s fair to worry about the state of the UK economy. The last few years have been particularly difficult for UK-listed companies that depend heavily on the domestic market. However, there are alternatives.
Here are two British-listed companies that have significant international exposure to help you diversify your retirement portfolio.
Shares of Chilean copper miner Antofagasta (LSE: ANTO) have had an up-and-down year, trading in a 727p to 1,020p range. Currently, the stock is trading at 863p a share, with the potential to move in either direction.
One of the reasons why mining stocks can exhibit such high volatility is that they are largely at the whim of commodity prices, which tend to be quite volatile themselves. In Antofagasta’s case, the miner has had to deal with falling copper prices, and, it has to be said, has done reasonably well despite the tough environment.
In its most recent trading update, the company reported it had increased cash profits by 44% to £1.1bn year over year for the first six months of 2019. This allowed management to increase the shareholder dividend by 34% to 8.65p a share. It has achieved these results in part by increasing its gold output. Unlike copper, gold has been performing very well this year, and is currently trading at $1,525 per ounce, a seven-year high.
Shares of Antofagasta are currently priced at a forward price-to-earnings (P/E) ratio of 16. This makes the stock somewhat expensive relative to industry peers, as the average US mining company carries a P/E ratio of 12.8. Its dividend yield of 5.5% makes it an attractive income play, comparing favourably with the FTSE 100 average of 4.53%.
Integrated shipping services provider Clarkson (LSE: CKN) is another stock with significant international exposure. Most of its business comes from its shipbroking division, but it also provides financial services for industry peers, port support, and research. Shares of Clarkson currently trade at 2,370p a share, and carry a dividend yield of 3.25%. So, as an income play, the stock is not as attractive as many alternatives in the FTSE 250.
Moreover, I believe that the ongoing trade war between the US and China could continue to exert downward pressure on the share price. While the trade war is also an issue for copper miners like Antofagasta, the difference is that demand for copper could recover even in a global environment where the US and China maintain trade barriers. Both of these economic powerhouses will still need access to commodities, even if the trade war grinds on.
Gold prices would also continue to rally if the uncertainty continues. However, the same cannot be said for the demand for shipping. Not all internationally-orientated stocks are created equal.