Brexit is almost here. And with that, stock market uncertainty can follow. FTSE 100 fluctuations may be balanced by the euphoria around the vaccine discovery. But I think it’s a good idea to prepare for any fluctuations in my investing portfolio that can result from it, in any case.
I think the way to do this is by diversifying my stockholdings. Companies most focused on the UK market can be impacted. I’d temper these purchases with internationally focused stocks, which will be hedged better. The following are five FTSE 100 picks that I think can Brexit- proof my portfolio:
#1. Ashtead: US infrastructure creation boost
The first of these, in order of name, is the FTSE 100 construction and equipment rental company Ashtead. It suffered a big blow earlier in the year, when its profit fell by 35% on the Covid-19 impact.
However, things are looking up. Not only will we (hopefully) put Covid-19 behind us soon, public spending aimed at infrastructure creation is likely to get a boost in the US, as a stimulus to the economy. Ashtead garners 60% of its revenue from the US, which is anyway a positive. At the same time, it’s Brexit proofed as a result too.
#2. Burberry: The China factor to cushion Brexit blow
The FTSE 100 luxury brand and retailer Burberry is another stock I like. It probably sounds contradictory that the classic British brand should be Brexit-proof. It turns out, though, that the retailer, best-known for its trench coats, has widespread international appeal.
More than 60% of its revenues are from outside of Europe. The Chinese have a particular fondness for Burberry. China’s growth has bounced back already, and will get better from here. I think this FTSE 100 stock will be stable, Brexit or not.
#3. CRH: Also a US beneficiary
Much like Ashtead, the Irish construction giant CRH also has large US operations. It was my one FTSE 100 pick if Biden won the election. A democratic sweep, in particular, would have been particularly great for the stock. But even now, it’s poised to do well on recovery in the US. From the time I wrote about it, it’s already up 5%.
#4. Rio Tinto: Benefiting from metals’ rally
The FTSE 100 multi-commodity miner Rio Tinto has benefited from the run-up in industrial metals’ prices. China’s public spending, in particular, has risen to stimulate the economy out of the Covid-19 funk. It got funneled into infrastructure expenditure, increasing metal demand and prices. The US could do the same next year, to some extent. Because of this, I think RIO is poised to do well despite Brexit.
#5. Unilever: Brexit hedged
This massive consumer goods company gets the largest share of its revenue from Asia, followed by the Americas. After that comes Europe. I reckon that the UK — much like with the other companies on this list – is a relatively small part of this. As a result, Brexit blows will impact it little, even though it just became a London-headquartered company after some debate.
Manika Premsingh owns shares of Burberry. The Motley Fool UK has recommended Burberry 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.