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What stocks could rise (and fall) if Labour wins an early general election?

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The maelstrom of chaos, cluelessness and cavalier manoeuvring in Westminster right now means that, to some commentators at least, Jeremy Corbyn appears a whisker away from seizing power in the UK.

All focus right now is on who will succeed Theresa May as prime minister once the Conservative leadership contest wraps up on July 22. Regardless of who comes out on top, though, there’s plenty predicting that any new government will unravel within a matter of weeks, or months, a reflection of the monumental challenge to create a credible Brexit plan and, more importantly, to sell it to Tory members of Parliament.

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In a recent article I discussed the gambling industry’s major players and explained how, like the utilities providers, can expect to suffer in the event of a Conservative collapse and Labour winning a subsequent general election.

Of course it’s not all bad if Labour succeed at the ballot box. Indeed, there’s a number of stocks that could benefit from a Corbyn-led government, providing you and I with plenty of investment opportunity.

NHS investment to surge?

Protecting and investing in the National Health Service is a critical issue for any party intent on winning power, though you can expect more funding to flow through should Labour march into Downing Street.

Outgoing prime minister Theresa May last summer vowed to invest an extra £20bn into the health service each year by 2023, though Labour was quick to say that it would go even further than this. It pledges to raise investment by between 4% and 5% in real terms per annum. This outstrips the 3.4% annual rise scheduled under current Tory plans.

It’s easy for opposition politicians to make financial pledges when they don’t have control of the pursestrings. However, it’s logical to expect health spending to be higher under the Labour party given their enthusiasm to raise taxes to pay for it, versus its main political rivals.

Investment in the NHS ballooned the last time Labour was in government and figures from the London School of Economics illustrate this perfectly. According to the institution, health expenditure in cash terms between 1997 and 2008 — two years before the party was thrown from power — grew by an eye-popping 128%, from £55.1bn to £125.4bn.

Profits prognoses getting better?

So which stocks could benefit under larger healthcare investment, then? Well, those involved in the NHS supply chain could receive a revenues boost, companies such as ConvaTec Group, which supplies colostomy bags, catheters and a broad range of wound care products, or Smith & Nephew, which is a giant in the field of hip and knee replacements.

Bioquell, whose hi-tech machinery and isolation pods helps to curtail cross-contamination in hospitals, is another business which could benefit from more NHS investment, like Scientific Digital Imaging, which provides imaging and sensory equipment for healthcare and other industries. A rise in hospital spending might give Tristel, a manufacturer of cutting-edge disinfectants, some extra help in the revenues column too.

Finally, a boost to health spending may also provide a bottom-line boost to owners of primary healthcare facility owners such as Primary Health Properties and Assura. These companies are already thriving as the NHS spends vast sums to divert patients from hospitals to local facilities like GP surgeries instead. And things could get even better if Corbyn reaches the top of the political hill.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Primary Health Properties. 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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