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Four U.K. 777彩票地址 to Consider Now that Brexit Deadlock Has Been Broken


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777彩票地址Brexit kept some U.S. investors away from United Kingdom–listed companies in 2019. Here are four stocks that may be worth taking another look at now the political deadlock has been broken.

777彩票地址For companies heavily exposed to the British economy, Brexit meant uncertainty for more than three years. Last month’s decisive election victory by Boris Johnson’s Conservative Party has eased fears over a U.K. departure from the European Union. A stronger pound, meanwhile would support British-focused stocks and hinder many of the FTSE 100’s overseas earners.

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The home builder Persimmon (ticker: PSN.UK), Barclays bank (BARC.UK), and telecom giant BT Group (BT.A.UK), are the U.K.-focused stocks favored by Jefferies, if Johnson can safely negotiate an exit from the EU.

Shares of Persimmon fell to 3? year lows of 1,841 pence ($24) in August amid the political deadlock over Brexit. The stock has since climbed 46%, to 2,689 pence on Friday. Jefferies contends that the stock has further to rise.

“We believe the FTSE-leading dividend yields of U.K. house builders remain difficult to ignore, our stock preference for Persimmon reflecting confidence in forecasts and strength of balance sheet,” says Jefferies analyst Glynis Johnson. Persimmon’s 9.4% dividend yield puts it in the top five in the FTSE 100, he notes.

777彩票地址Barclays stock has followed a similar pattern, falling to two-year lows of 135 pence in August 2019 and rising 36%, to 183 pence, since. Still, after settling various litigation and a restructuring, Barclays’ “return improvement and capital repatriation are the most visible they have been in 10 years,” says Jefferies analyst Joseph Dickerson.

777彩票地址Like Persimmon and Barclays, Class A shares of BT have surged since August, rising 22%, to 194.5 pence. Still, the stock is 40% undervalued, Jefferies contends, as investors await an update from the U.K. communications regulator on BT’s plan to roll out fiber-optic broadband nationwide.

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777彩票地址For those seeking a U.K.-listed stock but wishing to avoid one tied to the U.K. economy as the final act of Brexit plays out, a recovery in commodities may provide more certainty in 2020.

A brighter outlook for metals prices is expected to add to the gains for mining giant Anglo American777彩票地址 (AAL.UK). Since August, its shares have climbed 33%, to a recent 2,187 pence. Helped by stronger iron-ore prices, Anglo American reported revenue of $14.7 billion in the first half of the year, up 8% from the period a year ago, and underlying earnings of $5.45 billion—a 19% rise on the same period in 2018. The company announced plans in July to increase its dividend and buy back as much as $1 billion in stock.

Jefferies analyst Chris LaFemina says that a “cyclical recovery in commodities has begun and will take years to play out before the cycle peaks.” He has a Buy rating on Anglo American stock and target price of 2,600 pence.

“Anglo is operating well and increasing volumes and is therefore well positioned to benefit from commodity price upside,” he says.

Even with a “more cautious view” on commodities and mining stocks in 2020, J.P. Morgan Cazenove analyst Dominic O’Kane recently raised his recommendation on Anglo American to Overweight from Neutral. He has a target price of 2,550 pence.

With much-needed clarity and a number of risks easing, 2020 could be the year to return to U.K. stocks.

Email: editors@barrons.com


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