A no-deal Brexit? I’d buy these FTSE 100 shares to protect myself

For many FTSE 100 shares, a no-deal Brexit will have catastrophic effects. But these stocks look fairly immune and are therefore my top picks right now.

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According to industry leaders, a no-deal Brexit could be “catastrophic” for the UK. As such, the current Brexit uncertainty is having a negative impact on a number of UK shares. This is particularly true for banks, insurance companies, and house builders. Despite some renewed optimism that both sides will go the “extra mile” to reach a deal, Boris Johnson has still declared that a no-deal Brexit is the “most likely outcome”. It’s therefore necessary to find shares that are well-protected from this outcome. These FTSE 100 shares are my top picks.

A global superstar

Over the years, Diageo (LSE: DGE) has managed to establish itself as a true market leader, thanks to a portfolio of over 200 different brands. This portfolio includes renowned brands such as Guinness, Gordons, Smirnoff, and Johnnie Walker, each with a large degree of consumer loyalty. Diageo also has presence in over 180 countries, making it a global superstar.

This global presence is why I believe this stock is perfect in this time of Brexit uncertainty. Indeed, unlike many other FTSE 100 shares, Diageo has very limited reliance on the UK economy. This is why I don’t think a no-deal Brexit would be catastrophic for its share price.

In fact, Diageo may actually be able to benefit from a no-deal Brexit. Although the company is London-headquartered, most of its earnings come from outside the UK. This means that a weaker pound is actually a positive for earnings. Therefore, as a no-deal Brexit would lead to the value of sterling sinking further, Diageo shares may receive a further boost.

This FTSE 100 stock is the perfect Brexit play

British American Tobacco (LSE: BATS) is another stock I’d buy in this time of Brexit uncertainty. Firstly, only 1% of its revenues are in sterling, and a weak pound is therefore a positive for the group. In fact, most of its revenues come from the US, which should be mostly immune from a no-deal Brexit. This contrasts to rival brands such as Imperial which has a much greater reliance within Europe. As such, this differentiate BATS  from rival brands and a number of other FTSE 100 shares.

Alongside the positive currency impacts that a no-deal Brexit could bring, I’m also impressed with the company’s new strategy. Recognising that the world is changing, the Group has started to introduce a number of new products deemed to be much safer than cigarettes. This expanded portfolio should help increase the longevity of the company and help it adapt to the changing environment. 

Overall, I’d therefore buy these two FTSE 100 shares to profit from the Brexit uncertainty. Of course, if a Brexit deal can be reached by 31 December, there may be more lucrative options elsewhere. These may include UK  banks and house builders. But although I own a number of UK-focused stocks, I won’t be buying any more right now.

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.

Stuart Blair owns shares in Diageo. The Motley Fool UK has recommended Diageo. 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.

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