Another week closer to our official separation from the EU and the situation is as confused as ever. There’s now speculation that next year’s Grand National — due to run only a month after the deadline — could be impacted by a ‘no deal’ Brexit as Irish trainers are prevented from transporting their horses into the UK and France.
When even major sporting events are being affected, it’s easy to become bearish on the future of the UK economy. This being the case, here are two stocks that, thanks to their overseas exposure, should provide excellent homes for your capital whatever happens next.
Distribution expert and FTSE 100 constituent Bunzl (LSE: BNZL) isn’t an exciting business, but it’s nothing if not reliable. Despite a “challenging market” in the UK and Ireland, there’s much to like in today’s interim results.
At constant currency, revenue climbed 12% to £4.34bn in the first six months of the year with adjusted pre-tax profit rising 10% to £257.9m. According to the company, the former was “driven by strong organic growth” (at 5.2%) as well as contributions from acquisitions. Having added four businesses to its armory over the reporting period, it’s certainly been a busy period of buying for the company. Arguably the most interesting of these purchases was announced today.
The purchase of Oslo-based light catering equipment supplier Enor AS is Bunzl’s first foray into Norway, bringing its global reach to no less than 31 countries. Revenue at the latter — which operates from 11 locations and serves a variety of clients including hotels, restaurants and hospitals — hit £27m in 2017.
But Bunzl’s geographically diversified operations aren’t the only reason to consider buying its shares. With an uninterrupted 25-year streak of growing its payouts, the strongly cash-generative £7.8bn cap’s dividends are arguably some of the safest in the market’s top tier. Today’s 9% hike to the interim payout — to 15.2p per share — was reassuringly typical.
Having climbed a little over 21% since March, Bunzl’s stock isn’t cheap at almost 19 times forecast earnings. Nevertheless, the relative security of its earnings coupled with its clear desire to continue expanding into new markets suggests it’s a great stock for both defensive-minded and growth-focused investors.
Of course, the FTSE 100 isn’t short of companies with significant overseas presence, thereby presumably cushioning any blows from a less-than-favourable outcome to negotiations.
With more than 26m customers worldwide, financial services firm Prudential (LSE: PRU) is another stock that I think can be comfortably bought and held for years if not decades. In addition to helping sort the retirement needs of those in the UK and Europe, the £45bn cap has a presence in the US, Asia and, since 2014, Africa.
Highlights from this month’s H1 results included a 9% rise in operating profit to £2.4bn at the life insurer — higher than the expected £2.25bn. In line with its desire to capitalise on the growing demand for investment services in the burgeoning middle class, new business in Asia climbed 11%.
Having fallen around 12% since mid-January, Prudential’s shares can be picked up for a little under 12 times predicted earnings, reducing to below 11 in 2019 assuming analyst projections prove correct. Considering the opportunities ahead, that looks fairly cheap to me. A 2.9% yield may look rather average compared to other companies in the FTSE 100 but, like Bunzl, hikes have been consistent and the dividends are easily covered by profits.
Paul Summers 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.