Two FTSE 100 Brexit-proof shares I’d buy today

High-performing, well-diversified shares like these are the name of the game to buck the Brexit trend.

| 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.

Brexit uncertainty continues to be the Achilles’ heel for the Footsie, repeatedly dragging it down. The government is pushing for a deal before the 31 October deadline, but there’s no way of knowing if it will actually happen and what the terms will be if it does take place.

Investors, however, can take heart in the fact there are still a number of companies out there that know how to buck the trend.

Diversifying the risks

Consider the example of DCC (LSE: DCC), the business services provider with a focus on energy. Its share price has risen by over 128% in the past five years, despite all the uncertainty and having made only little headway in the past year. It’s not hard to find the reasons for its share price performance, I believe. The company reported an impressive 20% increase in operating profit for the last year and has a sunny outlook, too.

In my view, volume growth in its most profitable segment, LPG, across geographies works in its favour. In any case, it is fairly diversified with the UK contributing to less than half of its revenue. France and Ireland are two of its other big markets, which account for another 25% and all other markets together make up the remaining. Basically, this means that even if Brexit results in a crash for the UK economy, this FTSE 100 share isn’t going under.

I also like that it’s diversified into segments like technology and healthcare. While these make up only a little over 25% of its total revenue, they are growing segments that can hold DCC in good stead in the coming times.

Untouched by the larger environment

While DCC’s share price appreciation is noteworthy, pest-control provider Rentokil Initial (LSE: RTO) has performed even better. In the last five years, its share price has risen by 244%, with an almost 21% increase seen in the last year alone.

Clearly, this is one share that’s managed to remain completely insulated from the volatility around it.  To find out why, we only need to look at its geographical spread. North America is RTO’s largest market, followed by Europe. UK accounts for only 11% of its revenues.

I was a little wary of this share after it made a loss in 2018, but am far more confident after its good set of latest results, which showed a 10.7% rise in revenue and 13% increase in operating profits for the first half of the year.

I also like that it’s optimistic about making progress over the remainder of the year. Last, but not the least, pest control demand can be relied upon to be a source of steady customer demand, making RTO even more recession-proof.

The only catch to both DCC and RTO is their high price-to-earnings ratio (P/E) at 24.8 times (12 month trailing) and 27.9x (forward) respectively. Given their continued rise overtime, however, I doubt if the P/E will come off significantly anytime soon. I would definitely buy them on the next dip, if not right away.

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.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Here’s how I’d aim for a ton of passive income from £20k in an ISA

To get the best passive income from an ISA, I think we need to balance risk with the potential rewards.…

Read more »

Abstract bull climbing indicators on stock chart
Investing Articles

2 FTSE 100 stocks I’d buy as the blue-chip index hits record highs

This Fool takes a look at a pair of quality FTSE 100 stocks that appear well-positioned for future gains, despite…

Read more »

Satellite on planet background
Small-Cap Shares

Here’s why AIM stock Filtronic is up 44% today

The share price of AIM stock Filtronic has surged on the back of some big news in relation to its…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

At a record high, there can still be bargain FTSE 100 shares to buy!

The FTSE 100 closed at a new all-time high this week. Our writer explains why there might still be bargain…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

After profits plunge 28%, should investors consider buying Lloyds shares?

Lloyds has seen its shares wobble following the release of its latest results. But is this a chance for investors…

Read more »

Abstract bull climbing indicators on stock chart
Investing Articles

Something’s changed in a good way for Reckitt in Q1, and the share price may be about to take off

With the Reckitt share price near 4,475p, is this a no-brainer stock? This long-time Fool takes a closer look at…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

This new boost in assets might just get the abrdn share price moving again

The abrdn share price has lost half its value in the past five years. But with investor confidence returning, are…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

As revenues rise 8%, is the Croda International share price set to bounce back?

The latest update from Croda International indicates that sales are starting to recover from the end of 2023, so is…

Read more »