Brexit is a polarising issue, as much for investors as for anyone else. Some believe that the UK will come out with flying colours, the rest believe otherwise. Irrespective of what we think the outcome will be, I think as investors we can come out on top. The key to my view is having a baseline for choosing stocks to buy. This, for instance, can be companies that have survived the test of time and have good prospects for the future as well.
The next step is to assess the specific stocks in this set that can benefit if we are bullish on post-Brexit Britain, as well as stocks that will be a good hedge if the economy goes south. Based on this, I’ve identified five good UK shares to buy with Brexit in mind.
Best UK shares for the bullish investor
For investors positive on the UK independent of the European Union, I think Britain-focused cyclical stocks are ones to consider. Real estate is one example. FTSE 100 stocks like Barratt Developments, Taylor Wimpey, and Persimmon are a few examples. Among FTSE 250 property shares, I think Marshalls is one of the best UK shares to buy. It’s not a traditional property stock, but does provide essential property-related products that include landscaping of gardens and driveways, for example. It’s predominantly UK-focused, with only 5% of revenue garnered from its international business in 2019. I reckon that it will get a fillip in a robust post-Brexit UK.
JD Wetherspoon is another stock with potential. Pubs have taken a beating in the time of coronavirus, but if the economy were to bounce back sharply after Brexit, they are quite likely to come out ahead. If there’s any time to buy the stock, I think that’s now given that it hasn’t gained much since the stock market crash. It’s at almost half the levels it was at pre-crash.
Better placed than the restaurants and pubs business is the FTSE 250 retailer WH Smith. Like other stocks, it too has suffered from the lockdown, but it’s share price has recovered faster than JD Wetherspoon’s, as an instance. There is still room for further increase considering that it’s nowhere near its pre-crash levels.
For investors who are less bearish on the Brexit outcome and the impact it will have on the UK economy, the best UK shares to buy are easier to guess. I’d go for high-performing FTSE 100 stocks of companies with global presence and long histories. That way, even if the UK underperforms, they can continue to grow. One of these is the Anglo-Dutch consumer goods company Unilever, which needs no introduction. It’s a financially robust multi-national, whose share price is inching up fast. It also pays a dividend. For similar reasons I also think Diageo is among the best UK shares to buy. It has suffered in recent times but I think it is poised to recover and thrive in time. I’d buy its shares while they are still down.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Unilever. 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.